Investors’ rush to exit drags DSEX to 9-month low

Having too many negative factors together hurting investors' sentiment, the stock market faced a sharper and deeper correction on Monday.

Desperate sell-offs across the board dragged the DSEX, the broad-based index of the Dhaka Stock Exchange (DSE), 2% down to 6,430 points – the lowest since 2 August 2021 – while wrapping up Monday's bearish show.

According to stockbrokers, the confidence of investors has been shaky since 10 May when the DSEX started to move downward.

The weekend news that the de-facto market maker Investment Corporation of Bangladesh (ICB) will have to sell stocks for arranging Tk700 crore cash to reduce its borrowing exposure with Sonali Bank and a few other lenders has also worsened the sentiment.

On Monday, EBL Securities said in its daily market commentary, "Most investors sought risk reduction by dumping their holdings amid global macroeconomic turbulence that forced central banks to hike interest rates to combat inflation."

In the event, conservative policies from the government to safeguard dwindling forex reserve has made investors further anxious on the bourse, the commentary added.

Equity analysts are also much more conservative nowadays because of the negative global macroeconomic outlook, and uncertain and worsening local outlook amid deteriorating exchange rate, inflation pressure, inflation rate hike risk, along with the existing threat to corporate profitability.

Market summary

On Monday, the market opened with a sharp sell-off and that continued till the end of the session.

Over Tk9,200 crore in the DSE market capitalisation was wiped out as it dropped below Tk5.22 trillion.  

Only 26 scrips in the premier bourse weathered the storm while 348 declined and seven remained unchanged.

Due to the exit rush, daily turnover in the DSE sharply increased by 24.4% to Tk1,024 crore on Monday, while pharmaceuticals, banks and food sectors contributed over 10% each to the total turnover.

No sector saw any gain in market capitalisation while paper, services, and travel suffered the worst contraction of over 4% each in their respective market capitalisations.

Market capitalisation is the total current price of all the shares of a company or sector.

Chittagong Stock Exchange also faced a similar dominance of sellers on the board, while turnover in the port-city bourse increased to over Tk43 crore from less than Tk30 crore in the previous session.