Stocks keep sinking as investors’ confidence fades

The country’s capital market has again started facing an appalling situation as the benchmark index of the key bourse Dhaka Stock Exchange (DSE) lost 78 points in four straight sessions to Wednesday.

Investors, according to market analysts, have taken a cautious stand ahead of the cenbank’s upcoming monetary policy, while the market has fallen far short of steps to pacify investors’ jitters, the two major causes for the constant market crash.

Moreover, retail investors continued to cash in on stocks ahead of the Eid-ul-Azha, they said.

The DSEX went down 24.15 points or 0.38 per cent to settle at 6,274 yesterday against 6,298 in the previous trading session. Among other indices, the DS30, the blue-chip index, fell 4.4 points or 0.20 per cent to 2,181, and the DSES, the Shariah-based index, declined 5.1 points or 0.37 per cent to 1,364.

Turnover, another crucial market indicator, however, increased by 8.10 per cent to Tk 723 crore against the tally of Tk 669 crore in the previous session.

The life insurance sector contributed 21.09 per cent to the total turnover of the DSE to become the sectoral turnover leader, followed by pharma (14.1 per cent) and food (10.1 per cent).

The DSE’s benchmark index witnessed its fourth consecutive day of decline owing to the depressed market sentiment and lacking confidence across the trading floor, as concerns exacerbated regarding the market outlook ahead of the upcoming monetary policy statement, said EBL Securities, a stockbroker, in its daily market review.

The Bangladesh Bank is set to unveil on Sunday the monetary policy for the first half (H1) of the next fiscal year (2023-24), with a focus on policy reforms to meet the conditions imposed by the International Monetary Fund (IMF).

The monetary policy would be cautious as the country was facing several challenges, including a crisis in the foreign exchange market, said Md Habibur Rahman, chief economist at the cenbank.

The taming inflation he said would be the foremost priority in the upcoming monetary policy, while the interest rate corridor system, uniform exchange rate, and reserve calculation are expected to get importance.

Another BB official, who is involved in preparing the monetary policy, told The Business Post that policy reforms will also get priority in the upcoming monetary policy.

The BB planns to fix the 3 per cent interest corridor on the interest rate of 180-day Treasury bills for lending instead of the current 9 per cent lending rate in the new monetary policy.

The market experienced a downward trend throughout the session as investors continued to offload their holdings in order to protect their funds and minimise their losses from the ailing market, EBL Securities in its daily market review said.

Investors remained watchful as they feared waning market momentum due to the proposed increase in interest rates in the upcoming monetary policy statement, it added.

All the sectors displayed dismal performance yesterday, with the life insurance posting the highest loss of 4.4 per cent, followed by cement (1.7 per cent) and IT (1.7 per cent).

Block trades contributed 8 per cent of the overall market turnover.

Aziz Pipes Ltd rose by 10 per cent to become the topper of the gainers’ chart of the DSE, while Sonali Life Insurance Company Limited suffered the most with a loss of 9.9 per cent.

Out of the issues traded, 45 advanced, 117 declined, and 230 remained unchanged at the Dhaka bourse.

Meanwhile, Finance Minister AHM Mustafa Kamal on June 1 had placed a Tk 7.6 trillion national budget for the fiscal year 2023–24 before the Parliament with a focus on tackling skyrocketing inflation, employment generation, the fourth industrial revolution, and ultimately building a smart Bangladesh.

Market insiders said the proposed had fallen short of measures to give a boost to the country’s ailing capital market.

The new budget, in their view, was neither good nor bad for capital market investors.

Although stakeholders had demanded some provisions in the new budget to woo investors as well as bring good firms to the market, most of their urges remained elusive in the proposed budget.