Stocks worries deepens

Dhaka stocks plunged for the sixth trading session in a row on Wednesday as investors’ confidence further deteriorated after the government slashed the country’s proposed gross domestic product (GDP) growth target for the current fiscal year.

The proposed GDP growth cut significantly battered investors’ sentiments about a possible market rebound amidst the prevailing macroeconomic strains of the country.

The prolonged bearish market sentiment coupled with the floor price system frayed investors’ nerves, prompting them to liquidate their holdings, and making them reluctant to take fresh bets in the market, analysts say.

The finance ministry on Tuesday proposed to lower the target of gross domestic product (GDP) growth rate to 6.5 per cent for the fiscal 2022-23.

The proposal for lowering the GDP target from the earlier projection of 7.5 per cent came at the ministry’s coordination meeting on the Fiscal, Monetary and Exchange Rate.

Moreover, many blue-chip stocks have been stuck at their floor prices for a long time, a prime reason making investors averse to take fresh bets, analysts comment, consequently extending the worries of the market.

Following severe criticism about floor price system from various ends, the BSEC, the securities regulator, yesterday lifted floor prices from 169 companies and mutual funds.

Only 9 stocks out of the traded 285 scrips advanced slightly on the trading floor of the Dhaka Stock Exchange (DSE), the country’s premier bourse, yesterday.

Some 203 issues remained stuck at their floor prices yesterday, meaning that 71 per cent of the traded scrips did not saw any price movement at the prime bourse.

It, however, was no surprise because the Dhaka bourse has been registering over 70 per cent of the traded issues sticking to their floor prices every trading session for more than one month.

Analysts were blaming the floor price system as a prime cause behind the ailing situation of the majority of stocks with even many blue-chip stocks disregarded for a long time at their lowest price level due to the price floor system.

The DSEX, the prime index of the DSE, dipped 27.68 points or 0.44 per cent to close at 6,198 against 6,227 points in the previous trading session.

Among other indices, the DSES, the Shariah-based index, dropped 8.06 points or 0.59 per cent to settle at 1,355, and the DS30, the blue-chip index, lost 6.43 points or 0.29 per cent to 2.193.

Meanwhile, the Dhaka bourse witnessed a slight increase in participation with the DSE turnover rising by 3.5 per cent to Tk 333 crore against Tk 322 crore in the previous session.

Investors’ selling pressure was prevalent throughout the session as they chose to protect their funds from the ailing market, said EBL Securities, a stockbroker, in its daily market review.

The prolonged bearish sentiment prompted investors to anticipate no progress in sight, while the majority of companies’ dismal earnings forecasts owing to macroeconomic adversities, fueled their pessimism.

The pharma & chemicals sector topped the DSE turnover chart with a contribution of 21.1 per cent to the total turnover, followed by the ceramic (11.7 per cent) and the engineering (10.2 per cent).

Almost all the sectors displayed dismal returns at the premier bourse with the jute suffering the most with a loss of 8.3 per cent, followed by paper (3.4 per cent) and IT (3 per cent).

Out of the 281 issues traded, 9 advanced, 73 declined, and 309 remained unchanged on the DSE trading floor.

The port city bourse, Chittagong Stock Exchange (CSE), also closed lower with its two major indices – the selected indices (CSCX), and the all share price index (CASPI) – plunging by 45.8 points and 75.8 points respectively.