Stocks opened the week in red amid a bare progress in institutional fund injection – alongside a fear that the ongoing floor price mechanism might see an end in coming days.
The pace of economic recovery is also uncertain, according to investors' perception reflected in market commentaries by some top equity research teams.
DSEX, the benchmark index at the Dhaka Stock Exchange (DSE), fell by 0.45 percent to close at 4050 points, which went up to 4,112 on Monday last week.
The fifth consecutive red session of Sunday witnessed the biggest decline in indices since the short-term market top last week.
Floor pricing might see its end in coming weeks, and that speculation has ignited a fresh round of sell pressure on Sunday, a floor trader said while talking to The Business Standard at Motijheel – the financial district of the capital.
The Bangladesh Securities and Exchange Commission (BSEC) in March imposed a minimum price as a lower limit for individual stocks to avert panic sale and devastation for many unsophisticated investors, and also collective funds and institutions.
On Saturday, the BSEC chairman in a webinar on the "development of capital market" accepted the fact that the floor price is reducing market liquidity and said the commission is aware of it and effortful about lifting the emergency measure.
If the ongoing efforts to inject a large amount of funds into stocks do not gain momentum, and the floor price is lifted in the meantime, the market may see the majority of its scrips face a fresh round of price decline, said the trader who handles more than three dozens of wealthy individual client accounts.
BSEC Chairman Professor Shibli Rubayat-Ul-Islam – at an online meeting on Saturday – said 13 out of five dozen banks have their board approval to form the special fund for capital market investment as prescribed by the central bank.
"Money is there, so is an opportunity to grab some investable stocks at a bargain. The question is, is the market going to slide further?" said the brokerage professional seeking anonymity as he is not allowed to talk to the media.
Earlier in several media interviews, Professor Islam has said his commission and the government high-ups are looking for strength within the market and the disruptive measure would be lifted any day when the floor price would not be important anymore.
However, beyond market sentiment regarding the floor price method, some analysts are looking at macroeconomic data and business updates to find a fair value for equities.
The ongoing quarterly earnings and dividend declarations of several stocks have not met the investors' expectations, said EBL Securities research team in its daily market report to clients.
UCB Capital analysts echoed their clients' feel of uncertainty over how long the economy might take to get back to normalcy both in terms of export and local demand by defeating the pandemic.
Foreign portfolio investors have been pulling funds from Bangladeshi stock market for the last 14 months and the last fiscal year saw a record divestment that is also hurting the sentiment although foreign funds are not a significant contributor to the market capitalisation here.
"Everybody seems scared after hearing about what has happened recently, what might appear as worse next. No one talks about the potential turning point in long-term market direction right now," said the trader who witnessed two booms and bursts in Bangladesh's stock market previously – in 1996 and 2010.
"Now I would focus more to buy good stocks before they get pricey again," he shared his optimism for long-term investments.
Daily turnover is below Tk250 crore again after it went up to around Tk350 crore in recent weeks of returning momentum.
On Sunday, insurance, banking, financial institutions and telecommunication stocks ended positive while paper and printing, pharmaceuticals, textile and IT stocks led the market capitalisation losing table.
Of 327 issues traded at the DSE, 49 advanced, 78 declined and 200 remained unchanged.
The port city's bourse Chittagong Stock Exchange also registered a downward trend until the end of the session.