Stocks suffered a huge fall on Sunday amid increased concerns about the coronavirus, which is presumed to affect the economy and corporate profitability.
DSEX, the prime index of the Dhaka Stock Exchange, plunged a massive 97 points, or 2.2 percent, to close the day at 4,287.
The Shariah-based DSES index also lost 17 points, or 1.7 percent, to settle at 999, while the blue-chip index DS30 lost 27 points, or 1.9 percent, to stand at 1,435.
At the Chittagong Stock Exchange, the benchmark index Caspi declined 306 points, or 2.3 percent, to close at 13,098.
Turnover at the DSE increased 3.3 percent to Tk428.9 crore on Sunday, from Tk415.1 crore in the previous session. On the other hand, turnover at the port city bourse went up 25 percent from Tk16.1 crore to Tk20.1 crore.
According to the Daily Market Review of EBL Securities Ltd, the market fall on Sunday was explained by the panic sell-offs after warning by the Asian Development Bank (ADB) that Bangladesh would lose 1.1 percent or $3.02 billion of economic output to the ongoing Covid-19 outbreak.
Meanwhile, the Export Promotion Bureau (EPB) continued to register declining export earnings till February, which has now plunged further by 1.8 percent because of a slowdown in export shipment, the review added.
The DSEX continued to face correction after a five-week rally of up to 4,800 points on February 19 this year. The index had a sharp gain after the central bank's declaration of implementing supportive policy for increasing fund flow into stocks from the banking industry.
But till now, it failed to restore investors' confidence on the market, while the macroeconomic factors and earnings outlook seem to deteriorate further, told a research team member at a top brokerage firm.
The profitability of the banks is likely to suffer because of the imposed cap on interest rates. It will benefit large borrowers as their current portion of liabilities will go down, but average businesses will be deprived from bank loans, which will have an adverse effect on the economy, he said.
It is more of a bane than boon for the stock market as a whole in terms of corporate profitability. This is because the loser listed companies – the banks and average businesses – are going to sharply outnumber the gainers – the loan guzzling companies.
Additionally, cost escalation for businesses and a potential demand slowdown in exports are also reasons for worry to investors, the brokerage analyst informed seeking anonymity as he is not permitted to talk to media.
Less than 10 percent banks opted to avail the central bank's prescribed facility to build a special concessional fund to invest into the capital market, while the investment will be off-exposure until February 2025.
"We had an optimism that decreased interest rate might drive savings into the capital market. But the overall situation shows that investors are yet to be confident on the market," added the analyst.
All the sectors witnessed price correction on Sunday except telecom posting a 0.5 percent gain in the sector return board.
The pharmaceuticals sector contributed the highest 20.4 percent to the total turnover in the sector wise turnover distribution board.
VFS Thread Dyeing Ltd topped the turnover chart with a turnover value of Tk13.2 crore, closing the day at Tk26.4 per share. The stock was also the worst loser after shedding 9.9 percent on Sunday.
Apex Spinning and Knitting Mills Ltd was the best performer in the gainers' table after advancing 9.8 percent and closing at Tk127.3 per share, said the DSE website.
Out of 355 securities traded on Sunday, only 37 gained, 304 lost, and 14 remained unchanged on the DSE trading floor.