DSEX, the key index of the Dhaka Stock Exchange (DSE), extended its losing streak on Monday due to dampened investor sentiment amidst an uncertain market outlook and as the national budget for FY2024-25 upset investors.
The index lost 65.67 points or 1.27 per cent and closed at 5,105.89 at the end of trading. The blue-chip index, DS30, and the Shariah-based index, DSES, closed at 1,811.79 and 1,103.66 points, respectively.
Meanwhile, trading activities remained stagnant, with total turnover slightly decreasing by 10.9 per cent to Tk 318 crore from the previous session’s Tk 357 crore.
Monday’s session was the second after the FY25 budget was placed in parliament last Thursday. On Sunday, the DSEX dipped below the 5,200 mark after 38 months.
Investors were disappointed because the proposed budget did not include any positive news for the stock market, said sector insiders.
The market opened on Sunday sharply lower, which continued until the end of the session with no sign of reversal amid persistently lacklustre trade.
The relentless bearish spell on the country's capital bourse continues amid lower market participation, resulting from the enduring pessimism pervading the trading floor due to dampened investor sentiment amidst an uncertain market outlook, said EBL Securities in its daily market review.
Sellers continued to remain predominant across the trading floor as jittery investors opted to sell off their holdings to avoid further capital erosion in their already hampered portfolio, it said.
Investors shy away from taking positions in equities that cause the majority of scrips to turn into falling knives and be stuck at the lower circuit without having sufficient buyers, EBL Securities said.
BRAC EPL in its daily market review said that all the large-cap sectors posted negative performance on Monday. NBFI experienced the highest loss of 2.57 per cent. Block trades contributed 14.8 per cent of the overall market turnover. Orion Pharma Ltd was the most traded share with a turnover of Tk 15 crore.
Of the 396 issues traded, 25 advanced, 340 declined and 31 remained unchanged on Dhaka bourse.
Meanwhile, the Chittagong Stock Exchange (CSE) also settled on red terrain on Monday as the selected indices, CSCX, and All Share Price Index, CASPI, declined by 96.2 and 162.4 points, respectively.
Finance Minister Abul Hassan Mahmood Ali on Thursday placed the proposed FY25 budget with apparently no good news for the capital market, at a time when the market is passing a critical time amid lingering macroeconomic challenges.
Sector people said that the market index dropped because investors did not find any positive steps in the budget for them.
The proposed FY25 budget did not give capital market investors anything to cheer about. Even though stakeholders demanded some provisions to woo investors, as well as bring good firms to the market, most of their calls remained unheard in the proposed budget.
Market insiders believe the budget did not reflect the requirements of the stock exchanges, brokers, merchant bankers, listed companies, and investors.
Stock market investors will face a new tax burden in the upcoming fiscal year. The government has proposed imposing a 15 per cent capital gains tax on income exceeding Tk 50 lakh.
In his budget speech, the finance minister proposed “to tax any capital gain exceeding Tk 50 lakh received by a natural individual taxpayer from the transfer of shares or units of a listed company or fund.”
The minister recommended the move, which reverses a 2015 policy that exempted individual investors from capital gains taxes, to rationalise tax expenditure in FY25.
The budget has also proposed that profits made by any corporate entity other than individual investors by investing in the stock market will be taxed.
Meanwhile, the government proposed to set the corporate tax rate for listed companies at 22.5 per cent in the upcoming FY25 and FY2025-26, up from the existing 20 per cent, to reduce the tax barrier between listed and non-listed companies to 5 per cent from 7.5 per cent.
Besides, Abu Hena Md Rahmatul Muneem, the chairman of the National Board of Revenue, emphasised in a post-budget press conference that taxation was not the root cause of the capital market's issues and noted that longstanding tax incentives had not fostered market growth.
Capital market stakeholders have urged the government to reconsider this move, citing its potential to induce panic in an already fragile market.
