Stocks snap down after five-day rally
Among the traded scrips, 69 advanced, 264 declined, and 49 remained unchanged
The indices of the Dhaka Stock Exchange (DSE) dropped after five consecutive sessions of rallying, as savvy investors took the opportunity to book profits by selling off their holdings.
This marked a notable shift in market momentum, reflecting a strategic move by investors to capitalise on recent gains. Investors began selling from the start of the trading session, with selling activity intensifying around mid-day and continuing to increase until the end of the session.
In the previous five sessions, the DSE's prime index, DSEX, increased by 177 points following post-budget corrections.
However, on Monday, the benchmark index plummeted 27 points, settling at 5,220. Meanwhile, the blue-chip index DS30 was down by 10 points to 1,868, and the Shariah-compliant stocks' index, DSES, fell by 4 points to 1,143.
The turnover decreased by 1.42% to Tk480 crore compared to the previous session.
Among the traded scrips, 92 advanced, 255 declined, and 48 remained unchanged during the trading session.
Samata Leather Complex topped the gainer list by 9.98% to Tk55.10 each, followed by Pacific Denims by 9.57% to Tk10.30 each, and Investment Corporation of Bangladesh by 8.77% to Tk58.30 each.
Apex Spinning & Knitting Mills was on the top loser list as its share price declined by 3% to Tk103.60 each, followed by Al-Haj Textile Mills by 2.99% to Tk152.30 each, and Sonali Paper & Board Mills by 2.99% to Tk288.5 each.
Linde Bangladesh, Sea Pearl Beach Resort & Spa, Capitec Grameen Bank Growth Fund, British American Tobacco Bangladesh Company, and Rupali Life Insurance Company Limited were the most traded stocks on the Dhaka bourse.
Market insiders said the five-day-long gaining streak could be a sign of turning around from the previous massive losing trend. In the last five days, the DSEX recovered only 177 points, while it lost over 1,000 points from January to 11 June.
Abu Ahmed, a former professor of economics at the University of Dhaka, told The Business Standard that the market has hit rock bottom and now appears to be turning around.
"But the market should be allowed to operate freely. It is not right to impose anything artificial, such as floor prices, or reduce the limit of circuit breakers. Such interventions disturb the market's balance and erode investor confidence," he said.
The capital market has struggled with economic uncertainty worsened by the Russia-Ukraine war since its onset. To protect general investors from capital erosion, the Bangladesh Securities and Exchange Commission (BSEC) imposed a floor price in 2022 to prevent share freefalls.
After more than two years, the BSEC lifted the restriction, but the bearish trend continued, causing the DSEX to plunge over 1,200 points by 11 June. As a result, market capitalisation dropped by around Tk1.50 lakh crore during this period, and due to the prolonged downturn, around one lakh investors emptied their BOs.
In response, the BSEC re-implemented measures to protect investors, including reducing the circuit breaker limit from 10% to 3%.
EBL Securities wrote in its daily market commentary that the equity indices of the Dhaka bourse failed to uphold the recovery mode as risk-averse investors extended their selling mode since overall market sentiment remains subdued amidst an uncertain market outlook.
According to the commentary, sellers remained predominant right from the start of today's session since they were wary of the market's momentum and preferred to sell off their current holdings to observe the direction of the market trend, causing the intraday DSEX to fall below the 5,200-mark again by the mid-session.
However, some late-session buying behaviour on sector-specific scrips provided a slight recovery from the initial plunge, it added.
On the sectoral front, food issues accounted for the highest turnover at 38.2%, followed by pharmaceuticals at 11.3% and banking at 9.3%.
Most sectors showed dismal returns. Among them, travel at 2.2%, services at 1.6%, and general insurance at 1.3% exerted the most corrections on the bourse today.
In contrast, financial institutions posted a 3.6% gain, while engineering and cement showed slight positive returns of 0.7% and 0.5%, respectively.
The port city bourse, Chittagong Stock Exchange (CSE), also settled on red terrain. The selected indices (CSCX) and All Share Price Index (CASPI) declined by 60.0 and 95.6 points, respectively.