Amid ongoing market volatility after a long period of eight months, nervous investors are choosing to offload some of their holdings and book profits.
The emerged collective tendency triggered a further intensified selloff at bourses, and stock indices fell by more than 2% for a second consecutive session.
Very importantly blue-chip indices suffered a greater fall at both bourses.
DS30, the blue-chip index at the Dhaka Stock Exchange (DSE), fell by 3.2% on Monday – following a knee-jerk 3.8% slide on Sunday.
Meanwhile, the broad-based index, DSEX, dropped by 2.3% on Monday and 2.5% on Sunday.
Noticeably, the slides over the two sessions were accompanied by an increase in trading turnover at the bourses, which indicates sale pressure.
Fundamentals are sound
Experts said this was a mere technical correction – limited within the market factors – as nothing emerged as wrong in terms of fundamentals.
Economist Ahsan H Mansur, executive director at the Policy Research Institute, said the Bangladesh economy, money market liquidity and interest rate all look favourable.
Also, the Bangladeshi companies are doing well following whatever impacts they absorbed during the lockdown last year, he said.
"If we look at the global stock market, it is at around all-time high fuelled by low-interest rates," said Dr Mansur. "I do not see any reason to be panicked in the market as there is no fresh problem with investment fundamentals."
"Also, the market regulator is more efficient nowadays, and that has won investor confidence," he added.
Then, what is wrong?
Veteran stockbroker Rakibur Rahman, also a director of the DSE, believes that the sharp fall this week was unusual.
"Some stocks went high too fast in recent months, and now they are facing corrections. The regulator must look into the volatilities to see if anyone acted abnormally," he told The Business Standard (TBS).
Another stockbroker said the Bangladesh Securities and Exchange Commission's (BSEC) new leadership boosted investor confidence around mid-2020, and that was reflected in the market rally – a 50% hike in a time span of seven months.
Asking not to be identified, the broker said, "However, in recent weeks, it [the BSEC] has come up with some surveillance actions which have shaken the market's movers and shakers."
"This is the reality. As soon as the trend-setting large investors go to the side-lines, the market slows down, and if the majority of investors follow-through, that creates sale pressure, at least for the time being," he added.
Also, some recent steps such as suspending investment accounts for placing large buy orders, are being treated as "arbitrary" and that creates uncertainty among some investors and market intermediaries, added the broker.
BSEC calls for responsible investment behaviour
BSEC Executive Director and spokesperson Rezaul Karim told TBS, "The regulator just reminds everyone to follow the rules whenever it is needed."
It had a Zoom meeting with the brokers' association on Monday afternoon.
Karim said the meeting discussed market development topics and called for responsible investment behaviour – especially by institutional investors – to prevent market panic.
His office is keeping watch on brokerage firms and investment accounts, which has intensified the sale pressure.
"Nothing is wrong with buying and selling stocks in large quantities, the BSEC just called for putting and executing large trade orders in a smooth way so that they cannot shake market confidence," he said.