Hitting a new high on Sunday, the broad index of the Dhaka bourse did not sustain the entire session on Monday as investors opted for aggressive profit booking.
Market professionals said multiple negative updates discouraged the continuation of the buying appetite observed over the previous two sessions.
A senior stockbroker said a decline in remittance inflows, a central bank instruction to financial institutions for more provisioning and share selling, declarations by some company sponsors worked against the market.
Following the bullish note that prevailed on Thursday and Sunday, the stock market opened higher on Monday.
DSEX, the broad-based index of the Dhaka Stock Exchange (DSE), exceeded 7,400-mark in the first 70 minutes of trading.
Sellers' enthusiasm began to drag the index down and buyers surrendered after 1 am to let the index go down by 60 points in the last 90 minutes of the session.
Except for a very few selective scrips, all suffered sell pressures in the second half of the session. At the end of the day, only 48 scrips advanced, 297 declined while 31 remained unchanged on the DSE.
A shift in stock preference
Many investors turned their focus to upcoming financial disclosures and preferred a portfolio restructuring to increase their stake in selective stocks, and offloading some of the existing holdings, EBL Securities wrote in their daily market commentary to its clients.
Since a wide range of average stocks suffered sell pressures, DSEX went down 28.5 points or 0.39% to close at 7,327.
Meanwhile, Shariah Index DSES closed flat at 1,593, and blue-chip index DS30 gained 0.86% to close at 2,765, reflecting investors' increased appetite for selective stocks.
More activity in some large-cap scrips and an intensified selling pressure in most small and mid-cap stocks together increased the daily turnover at the DSE by nearly 13% to Tk2,755 crore.
On the sectoral front, pharmaceuticals led the daily turnover table with a contribution of over 15% of the DSE transactions on Monday. Engineering and energy sectors followed with 12.22% and 9.88% turnover contributions respectively.
Most of the sectors suffered contractions in their market capitalisation. The jute, textile, and IT-led the sectoral losers' table with over 2% decline.
The cement sector gained the most, registering a 3% increase in market capitalisation, followed by the ceramic and food sectors.
Stocks with sponsors' recent share selling declarations, such as Eastern Insurance and National Housing, have suffered a free fall over the session.
The average price to earnings (PE) ratio of the DSE stood at 18.28, according to LankaBangla Securities Research. This is based on the annualised profits of the listed companies.
The ratio goes higher to 19.6 when they consider the trailing profits of the listed firms, which is the total of the last four quarters. On the other hand, annualised profits are calculated based on the latest quarterly figures.
Since listed firms are recovering from the pandemic shocks, most had posted higher earnings per share in their latest quarterly disclosures, compared to the previous ones.
Eliminating the loss-making firms from PE calculation, United Securities calculated the average annualised market PE at 16.44, which is 17.66 considering the trailing earnings per share.