Stocks slip ahead of national budget

The benchmark index of the prime bourse Dhaka Stock Exchange (DSE) slid Wednesday, as a section of investors withdrew their funds from the market ahead of the announcement of the national budget for the upcoming fiscal year.

The government is scheduled to unveil the budget for the fiscal year 2023-24 at the national parliament today, and concerning the budget issue, investors remained cautious yesterday, creating a mild volatility in the market.

Moreover, in order to shun any possible market fallout after the budget declaration, many investors went for massive profit booking, causing a fall in the major indices.

But, amid the weakening indices, the Dhaka bourse’s turnover hit a fresh seven-month high, thanks to heavy selloffs in the market.

The DSEX, the broad index of the DSE, fell 6.05 points to close at 6,339, against 6,345 in the previous session.

Among other indices, the DS30, the blue-chip index, lost 4.6 points to settle at 2,198, while the DSES, the Shariah-based index, edged up 1.3 points to 1,377 yesterday.

The turnover at the premier bourse shot up by 22 per cent to Tk 1,198 crore yesterday, against the turnover tally of Tk 976 crore in the previous session.

With this jump, the DSE registered a fresh seven-month high level in its turnover. The life insurance sector topped the turnover chart, with a contribution of 17.58 per cent of total turnover of the DSE, followed by followed by IT (13.8 per cent) and general insurance (11.9 per cent).

Bashundhara Paper Mills Limited was the most traded share with Tk 50.5 crore worth of its shares changing hands, followed by ntraco Refueling Station Limited, and Navana Pharmaceuticals Limited.

Block trades contributed 4.1 per cent of the overall market turnover.

Most sectors displayed dismal returns at the capital bourse, with the travel facing the highest correction of 2.8 per cent, followed by general insurance (2.4 per cent) and jute (1.0 per cent), as per EBL Securities, a stockbroker.

On the other hand, the IT witnessed the highest gain of 4.8 per cent, followed by paper (1.8 per cent), and food (0.3 per cent).

Finance Minister AHM Mustafa Kamal is all set to unveil the national budget for the fiscal year 2023–24 today.

Most investors followed a cautious stance on Wednesday, while some opted for late-hours profit booking ahead of the imminent declaration of the national budget, a market insider said.

Although the market started on a positive note, sell pressure continued to mount across the bourse, leading the core index to dip into negative territory by the end of the session, according to stockbrokers.

EBL Securities in its daily market review said the key index of the capital bourse failed to extend its gaining streak owing to the profit-booking sell pressure of cautious investors, who preferred to remain watchful ahead of the new fiscal budget.

In the current situation, investors should put funds for the long term in stocks with good fundamentals. Investing in shares of good companies will keep the investors’ investments safe, analysts opined. Out of the securities traded, 66 advanced, 113 declined, and 213 remained unchanged at the Dhaka bourse yesterday.

Md Sayadur Rahman, president of the Bangladesh Merchant Bankers Association and also managing director of EBL Securities Limited, told The Business Post that the reviews concerning Bangladesh’s capital market are mostly negative. As a result, the market is not able to turn around despite various initiatives taken by the regulator Bangladesh Securities and Exchange Commission (BSEC).

The investment of undisclosed money in the capital market should be allowed in the upcoming national budget. If it is allowed for at least one more year imposing a 5 per cent tax, the liquidity flow in the market will increase, and the country’s economy will enjoy its benefits. Otherwise, the undisclosed money can be misused, he said.

Tax rebate opportunity likely to sustain:

Currently, taxpayers are enjoying a 15 per cent rebate on their investments up to a maximum of 20 per cent of their taxable income in the stock market, deposit pension schemes (DPS), life insurance, etc.

But, the National Board of Revenue, according to media reports, proposed the finance ministry to withdraw this benefit against investments made in the secondary stock market in the next fiscal year.

A BSEC source with knowledge of the matter told The Business Post that tax rebate on secondary stock investments will remain unchanged in the upcoming financial year, as the withdrawal of the issue was not included in the budget document.

“The government has taken such move to keep the country’s capital market stable.”