Stocks crash as investors exit market to shun capital erosion

Dhaka Stocks witnessed a crash on Wednesday, with the prime index of the Dhaka Stock Exchange (DSE) sinking to a fresh four-month low, as investors continued to rush to selloff their holdings to shun further capital erosion.

The free fall of stocks made investors panicked, as per stockbrokers, leading them to dump their shares to avert further losses amid the downward market momentum.

The DSEX, the benchmark index of the premier bourse, plummeted 36 points to settle at 6,220, the lowest since April 16 last.

The potential resurgence of political tensions puts investors into dismay, while small investors having their back to the wall owing to the ongoing inflationary pressure, sell shares when a stock breaks out from the floor price, causing to a constant downward trend in the market, stock analysts said, adding that the floor price mechanism has pushed investors into the verge as most stocks have been stuck at the floor for a long period.

The market has been in bear trend for more than a year since the securities regulator imposed the floor price. Buyers are hesitant to buy stocks even at the lowest price set.

Richard D Rozario, president of the DSE Brokers Association of Bangladesh (DBA), told The Business Post that the investors were now in fear of political unrest, leading to a decrease in participation of ordinary investors on the trading floor, hurting the overall market momentum.

The participation of institutional investors also got decreased, he said, adding that now is the time for them to buy shares.

Turnover, another crucial market indicator, declined by 15 per cent to Tk 352 crore yesterday against the tally of Tk 414 crore in the previous session.

It was the lowest single-day transaction since March 28 last, when the turnover was registered at Tk 272 crore.

The food and allied sector topped the turnover chart with a contribution of 17.8 per cent of the total daily turnover of the Dhaka bourse, followed by pharma (13.5 per cent) and travel (8.5 per cent).

Sea Pearl Beach Resort and Spa Limited was the highest traded stock with Tk 26 crore worth of its shares changing hands, followed by Square Pharmaceuticals PLC, and Fu Wang Food Ltd.

The equity indices of the capital bourse shattered into red terrain for consecutive sessions as nervy investors engaged in panic selloffs to escape further losses owing to the prolonged volatility in the market with no sign of revival yet, said EBL Securities, a stockbroker, in its daily market review.

The market trend extended its free fall right from the start of yesterday’s session since investors’ appetite for taking positions in equities crumbled due to confidence crisis across the trading floor amid rising tensions over the market outlook, it added.

According to the chief executive officer of a leading stock brokerage house, general investors remained panicked for several reasons, while there were no funds in the hands of individual or institutional investors. That’s why they were rushing to sell shares just when they got chance to secure a minimum gain, propelling the market to dip.

All the sectors displayed dismal returns, with the travel facing the highest loss of 6.3 per cent, followed by paper (4.9 per cent) and jute (4.5 per cent), as per EBL Securities.

As per the daily market review of Brac-epl Stock Brokerage, all the large-cap sectors posted negative performance, with the food and allied experiencing the highest loss of 0.41 per cent, followed by bank (0.22 per cent), pharmaceutical (0.20 per cent), fuel and power (0.17 per cent), engineering (0.11 per cent), NBFI (0.02 per cent), and telecommunication (0.00 per cent).

Fu Wang Food Ltd rose 6.9 per cent to become the day’s top gainer, while Sea Pearl Beach Resort and Spa Limited fell 9.9 per cent becoming the day’s worst sufferer.

Out of the securities traded, 16 advanced, 146 declined and 230 remained unchanged.

The port city bourse, CSE, also settled on red terrain, with its two major indices – the selected indices (CSCX), and the all-share price index (CASPI) – declining by 40.6 points and 67.4 points respectively.