Stocks snap two-day rebound rally
Stockbrokers and analysts blamed the decline on the deteriorated corporate earnings alongside the fears of a worsening macroeconomic situation
Stocks nosedived again in the first session of the week after two days of recovery in the last week.
A steady decline over the entire session pushed the Dhaka bourse's broad-based index DSEX 0.8% down to close at 6,215 points on Sunday.
Stockbrokers and analysts blamed the decline on the deteriorated corporate earnings alongside the fears of a worsening macroeconomic situation.
Even the central bank nowadays has to keep assuring people that there is no liquidity crunch in the money market and deposits at banks are safe, said a stockbroker while explaining the factors hurting investor sentiment regarding the stock market.
"Dismal corporate earnings for the second consecutive quarter also weakened investor confidence to take long-term positions in equities," said EBL Securities in its daily market commentary.
Following the Ukraine war outbreak, over half of the listed firms have been facing earnings deterioration due to a soaring dollar and fuel price hikes that have pushed up their costs and made the inflation-hit consumers tighten their belts.
The market continued to fall throughout the session as investors opted to offload their holdings and remain on the sidelines as they anticipated a bleak market outlook, induced by the ongoing macroeconomic adversities in the country, EBL Securities said.
The price floor on individual scrips in both Dhaka and Chattogram bourses are artificially preventing investors' capital erosion since the end of July but barely removed their pains as over three-fourths of the listed scrips are stuck on floor prices having no buyer interested at the price levels.
Also, the increasing lack of trust among a large number of investors that the securities regulator would stick to its commitment of not removing the artificial protection as long as it is relevant is hurting the market sentiment frequently.
Officials at the Bangladesh Securities and Exchange Commission (BSEC), however, have been tirelessly assuring the market that the floor price would remain in place to dispel rumours of its removal.
Most of the recently rallied stocks suffered big selloffs on Sunday while Navana Pharma, Eastern Housing, Bashundhara Paper Mill, ADN Telecom, BDCom, KDS Accessories, SinoBangla Industries, Orion Pharma, Paper Processing and Monospool Paper were the top losers in the DSE on Sunday.
Each of them lost 8-10% of their respective market capitalisation, while only five life insurers Pragati Life, Progressive Life, Chartered Life, Prime Life and Padma Life Insurance gained by more than 5%.
The Dhaka bourse observed a significant drop in participation while the total turnover declined by 23.4% to Tk423 crore.
The Life Insurance sector contributed to the maximum 19.4% of the daily turnover followed by the pharmaceutical-chemical and IT sectors.
Most of the sectors suffered market capitalisation contraction, with paper and printing, jute and travel-leisure leading the declines losing 7.9%, 5.4% and 3.2% in value respectively.
After a long hibernation, life insurance appears to be trending in the market nowadays.
Out of the 390 issues traded on the DSE, 20 advanced, 68 declined, and 302 remained unchanged, mostly because of the floor prices.
The Chittagong Stock Exchange (CSE), on the other hand, saw around 0.3% decline in its broad index CSCX and CASPI.
Daily turnover in the port city bourse increased by 10.9% to Tk9.5 crore.