Stocks slip after two-day rally

The Dhaka Stock Exchange (DSE) indices slipped today (6 November), following a two-day rally, as investors moved to book profits. 

The benchmark DSEX index shed 18 points to close at 5,347. The blue-chip DS30 index dipped to 1,968, while the shariah-compliant DSES index inched up a point to 1,193.

The turnover decreased by 22.5%, reaching Tk651 crore, down from Tk840 crore in the previous session. Among the 399 stocks traded today, 85 gained, 281 declined, and 33 remained unchanged.

The indices opened positively, showing an upward trend for the first few minutes. However, they experienced mixed movements for the next two hours. In the final hour, the indices shifted into a correction mode, continuing this downward trend until the session's close.

According to market insiders, the recent gains were driven by a new tax regulation: a 15% tax rate on capital gains over Tk50 lakh. This led to a sharp rebound, with the market gaining 215 points in two days, and many stock prices rising by 10-20% following the news.

The market saw some optimism after the fall of former prime minister Sheikh Hasina. But the sentiment faded quickly due to financial scandals involving the previous government and ongoing economic and political uncertainty.

Since February, the DSE has been in a bearish phase, worsened by a proposed 15% capital gains tax on individual investors before the 2024-25 fiscal year budget. This move led to panic selling, especially against the backdrop of the global economic crisis and the Russia-Ukraine conflict.

Key stocks that contributed to the decline included Robi, Berger Paints, BRAC Bank, Renata, Bangladesh Submarine Cables, Olympic Industries, Grameenphone, and Eastern Bank Ltd.

EBL Securities, in its daily market commentary, noted that the benchmark index saw a moderate correction, as risk-averse investors preferred to book short-term profits amidst ongoing uncertainties related to upcoming quarterly earnings reports. These reports are expected to reflect the economic disruptions following July's civil unrest and political instability, it said.

At the sectoral level, pharma stocks accounted for the highest turnover at 19.2%, followed by banks at 18.0% and textiles at 8.1%. The sectors showed mixed performance, with jute gaining 5.3%, engineering up by 2.5%, and travel rising by 1.2%. On the other hand, paper declined by 3.4%, life insurance dropped by 3.2%, and general insurance decreased by 2.5%.

The port city bourse, Chittagong Stock Exchange (CSE), also ended in the red. Its benchmark index CSCX dropped by 8.6 points, while the All-Share Price Index gained by 2.7 points.