Key index again below 6,300-mark as jitters engulf market

Dhaka stocks experienced an appalling week, with the Dhaka Stock Exchange’s (DSE) benchmark index falling much below the psychological threshold of 6,300 points as jitters engulfed investors ahead of the cenbank’s upcoming monetary policy.

Wary investors, moreover, opted to offload their holdings in bid to safeguard their funds from the ailing market, another reason for the market crash.

The DSEX, the broad index of the DSE, gave in 72.8 points, or 1.1%, to settle the week at 6,280, against 6,352 in the previous week.

Turnover, another crucial market indicator, averaged out at Tk 773 crore this week, down 28.9 per cent than the average tally of Tk 1,088 crore in the previous week.

This week’s average daily turnover was the lowest over two months.

The capital bourse’s benchmark index experienced a significant drop this week, falling below the psychological threshold of 6,300-mark, as investors preferred to take a cautious stand ahead of the announcement of the upcoming monetary policy statement, said EBL Securities, a stockbroker, in its weekly 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.

Apart from this, many of retail investors offloaded their holdings to have capital ahead of the Eid ul-Adha, stockbrokers said.

Investors preferred to liquidate their positions in equities and stay on the sidelines in order to guard their funds from the declining market, as they feared a waning market momentum due to the proposed increase in interest rates in the upcoming monetary policy statement, EBL Securities said.

Investors were mostly active in the life insurance sector, with the sector became the week’s turnover leader by contributing 24.6 per cent of the total DSE turnover, followed by food (10.0 per cent) and pharma (9.9 per cent).

The market performed five sessions this week, with the DSE remaining in the negative territory in the first four trading sessions till Wednesday.

The market, however, returned to the green territory with a slight gain of 0.08 per cent on Thursday.

Sectors, according to EBL Securities’ weekly market review, mostly showed negative returns, with the life insurance becoming the top loser with a massive correction of 13.8 per cent.

On the other hand, the tannery sector posted the highest gain of 0.7 per cent in the week.

The financial sectors displayed a very negative performance this week, Brac-EPL say, with the life insurance facing the the highest loss of 13.78 per cent followed, by general insurance (6.37 per cent), bank (0.31 per cent), mutual fund (0.25 perc cent), and NBFI (0.11 per cent).