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Stocks witness worst index in a year

If proposed budget was good, DSEX would not have fallen: Analysts
Staff Correspondent
21 Jun 2024 00:12:35 | Update: 21 Jun 2024 00:12:35
Stocks witness worst index in a year

The Dhaka Stock Exchange (DSE) flagship index, the DSEX, is experiencing its worst session ever, hitting a 52-week low. Despite slight improvements in two trading days this week, DSEX fell to the 5,000s during last Tuesday's (June 11) trading session, underscoring the severity of the situation.

A year ago, in June 2023, the DSEX's position was 6,300 points. In contrast, the benchmark index stood at 5,244 points on Thursday.

However, during the trading session of June 11, the flagship index stood at 5,070 points, the lowest in the last 52 weeks.

Debbrut Kumar, former chief research officer at BRAC EPL Investments, discussed the impact of the proposed 2024–25 fiscal year budget on the capital markets with The Business Post last week. Consequently, the index dropped on three out of the five working days that week, with the DSEX plummeting by over 167 points during those three days.

Additionally, the index had been on a downward trend for several weeks prior to the proposed budget announcement. Notably, the entire month of April witnessed a significant decline in the indices, marking it as a period of sustained market downturn, he opined.

He noted that in April, the DSEX dropped by 593 points while gaining only 261 points. This significant net decline indicates that investors have been reluctant to make new investments since then.

"Now, the index might rise again. However, the inflation rate in the country remains higher than it was a year ago. Consequently, investors are opting to withdraw their investments by selling shares as their losses mount rather than making new investments. This behaviour is worsening the recession in the capital market," he said.

Abu Ahmed, a capital market analyst, said, "If the proposed budget had something good for the capital market, the DSEX would not have fallen to its lowest level in 52 weeks after the budget.

"No one will invest in the capital market if there is no profit for the investors. The government should consider minimum incentives here for new investments, bringing new companies to the capital market," he added.

From June 2023 to March 2024, DSE's flagship index, DSEX, rose to 6,000 points, but since then, the index has fallen to the 5,000s with a cherry on June 11, when it fell to 5,070 points and reached its lowest in a year.

Abu Ahmed said that such a condition of the index proves the investors' lack of confidence in the capital market.


Last week's transactions

Due to the Eid-ul-Azha, any trading remained closed on the public holidays, which started on June 16 and ended on June 18, resulting in the week ending with transactions on June 19 and June 20.

The benchmark index, the DSEX, with a 2.45 per cent gain of 126.31 points, closed the week at 5,044.12 points. The blue-chip index, the DS30, gained 3.39 per cent with 3.99 points and stood at 1,146.05 points. The Shariah-based index, the DSES, with 2.91 per cent, gained 53.58 points and stood at 1,875.47 points.

On June 19, the turnover stood at Tk 246.44 crore, and on June 20, the turnover was Tk 452.92 crore.