Dhaka stocks closed 1.3% lower at the last session of the month with investors' participation reduced to a seven-week low.
Analysts link the fall to profit-booking efforts and cautious approach of investors, following a big rally in a short time span.
Mainly a large number of investors, from the sideline, are allowing the market to settle through a natural course of correction as the DSEX had witnessed more than 20% hike in 8 weeks up to mid-January, said Emran Hasan, chief executive officer of Shanta Asset Management.
DSEX, the broad-based index at the Dhaka Stock Exchange, beginning its long overdue turnaround from below 4,000 levels in June, rallied up to 5,971 mark in January and later entered into a moderate correction.
On Sunday, the index was hovering above 5,700 mark but nosedived since 11.45 am and closed at 5,649.
Stock brokers informed, alongside profit booking, there also were some month-end adjustments by investors who were overexposed in the market.
Investors are also taking little time to assume the impacts of the central bank circular, which enabled loan classification by banks following the cushion period over 2020 due to the pandemic.
Based on banker-client relationship, banks can now extend the tenure of any unrecovered loan for up to half of the remaining tenure limited within 24 months, said the Bangladesh Bank.
Cautious investors tend to be watchful during the earnings disclosure season as they want to take a look at the entire picture.
Turnover at the DSE came down to Tk823 crore, the lowest since December 20.
Bangladesh Merchant Bankers Association Vice-President Md Moniruzzaman, also the managing director of IDLC Investments Ltd, said as some widely traded stocks are facing price correction, investors' participation over the day naturally got reduced.
He also assumes the fall as natural correction.
EBL Securities Ltd in its daily market recap said, "The market observed a prevalent selling pressure since the last couple of sessions while most of the investors' adopted the sideline to observe the market correction in the midst of quarterly earning disclosure."
Analysts are observing the corporate earnings for the October-December period, which display a better recovery for some significant sectors like construction material, consumer products, while profit growth of some listed companies from stressed industries like hospitality, housing, spinning is also turning some additional heads for analysis.
Blue-chip index DS 30 suffered the biggest fall on Sunday, 1.41%, while Shariah-compliant stocks' index DSES fell by 1.17%.
Against 56 gainers, 210 issues lost prices and 90 remained unchanged at the DSE.
Meanwhile, the Chittagong Stock Exchange (CSE) saw its indices falling less than their counterparts at the capital city bourse. CSCX the broad-based index at the port city stock exchange fell by 1.2% to close at 9,942.
CSE, however, witnessed its daily turnover to go up by 90% to Tk82.7 crore.