Hitting new lows almost every day over the last few weeks, the stock market on Monday nosedived to a 56-month low.
Stocks suffered the sharpest falls in the first days of the New Year, deepening investors' pains.
Amid an absence of optimism and with broken confidence DSEX, the broad-based benchmark of the Dhaka Stock Exchange, lost 7.4 percent in January alone. The fall in price is gradually sharpening.
All the benchmarks at the country's two stock exchanges have already gone through a steep one-third fall since January 2019.
The core index at the premier bourse fell 2.1 percent on Monday to close at 4123, which is the lowest since May 10, 2015. Market professionals have described it as the sharpest fall since February 4, 2018.
The DSE has lost Tk1 lakh crore or 23.8 percent of its market capitalisation since the market's interim top of January 24, 2019. The bourse witnessed its market capitalisation coming down below Tk3.2 lakh crore for the first time since September 2016.
Experts blamed the deteriorating macro-economic, industry-wide and corporate profitability scenario amidst more squeezing funds flow into stocks for the situation.
UCB Capital, like most other top equity firms, has noted in its research note to private clients that the market fell so sharply, with an almost 10 percent hike in trading volume, because of a desperate sell off.
The professional commentary, obtained by The Business Standard, also mentioned that investors became more worried after the finance minister reiterated his strong stance on implementing the single-digit interest rate from April this year.
Experts are doubtful if the move, bypassing market mechanism, will be effective in bringing down the interest rate in a sustainable manner.
Analysts fear the government move will slow down loan disbursement and affect banking sector profitability, when the sector is already under pressure to manage historic high non-performing loans.
The move to cap interest rate at 6 percent against all kinds of deposits and 9 percent for lending will merely lengthen the list of problems, said an equity researcher at a top brokerage firm.
Preferring anonymity, he told The Business Standard, "I am really frustrated that the finance minister, despite being a chartered accountant, is not thinking about market viability. I am afraid that it (capping interest rates) will backfire and may lead to a slowdown in economic activities."
"It is a market where everybody is sunk into increasing losses. Instead of supporting the market with friendly policies, the government is taking wrong steps," said a chief executive officer at another top brokerage firm.
Stock investors are struggling to recover from losses due to the long-term downturn that began in December 2010.
The then broad-based index started to fall from 9,000 and bottomed out from 3,400 level in 2013. It went above 6,300 in November 2017.
Market on Monday
Only 21 listed securities gained, while 313 lost and prices of 20 were unchanged on Monday.
No sector gained market capitalisation, while all sectors lost over 1 percent. The exceptions were pharmaceuticals and travel and leisure.
Among major sectors, telecom lost 4.6 percent. Grameenphone share price fell over 4.7 percent because of its intensifying tussle with the telecom regulator.
Meanwhile, textile, food and allied as well as non-banking financial institution sectors lost market capitalisation over 3 percent.
According to BRAC EPL Stock Brokerage research, the DSE is trading at an average price to earnings ratio of 11.8, while the 10-year average of the popular valuation indicator is 16.5.
Average price is only 1.3 times of the net asset value of listed companies, while average dividend yield is at 4.9 percent now.