Index hits three-month low, market panic over big price drop

Staff Correspondent

The country’s main capital market, the Dhaka Stock Exchange (DSE), saw a big drop in prices on Sunday (October 12), the first working day of the week. Seven times more securities traded on the day fell in price than those that rose. As a result, the indices fell by nearly 2 percent in a single day. The main index, DSEX, has returned to its three-month low. However, the volume of transactions increased slightly.

According to market analysis, shares and units of a total of 396 companies were traded on the DSE today. Of these, only 47 increased in price, 311 decreased, and 34 remained unchanged. Among the securities whose prices fell, 175 were in ‘A’ category, 70 in ‘B’ category, and 66 in ‘Z’ category.

The market plunged, sending the DSE’s main index, DSEX, down 81 points, or 1.54 percent, to 5,202 points. The index was last lower on June 20, when it was at 5,194 points. Among other indices, the DSE Shariah Index (DSES) fell 19 points, or 1.72 percent, to 1,115 points, and the DSE-30 Index fell 35 points, or 1.70 percent, to 2,033 points.

Bank merger issue behind the decline

Midway Securities Limited Managing Director (MD) Md. Ashekur Rahman said, ‘The decision to merge the five banks is the main reason for the current big correction. The government will inject Tk 20,000 crore capital into those five banks, which may further increase inflationary pressure. This is also having an impact on the capital market. In addition, many are selling shares in panic as the future of the investors in the banks has become uncertain. Moreover, many companies could not show expected profits at the end of June closing, as a result of which selling pressure has increased there too.’

A total of 542.55 crore taka of shares and units were traded on the DSE today, which is about 123.7 crore taka more than the 530.18 crore taka of the previous working day.

CVO Petrochemical Refinery PLC was the top performer, with shares worth Tk 238.6 million traded. Domination Steel Building Systems Limited was the top performer on the previous trading day with shares worth Tk 219 million.

Chittagong market also fell

The same trend was seen at the country’s second-largest stock exchange, the Chittagong Stock Exchange (CSE). All indices fell and overall trading volume declined due to the decline in the prices of most securities.

The CSE’s overall index CSPI fell 185 points to 14,762 points. The CSCX index fell 112 points to 9,077 points. Shares and units of 194 companies were traded on the CSE today, of which 32 increased, 147 decreased and 15 remained unchanged. The total transaction was Tk 10.39 crore, which is almost half of the previous day’s Tk 22.61 crore.

Negative sentiment among investors

Saiful, president of DSE Brokers Association of Bangladesh (DBA), also cited the same issue as the reason for this major decline in the capital market. He said, “The decision to merge five banks without clarifying the protection of investors’ interests has sent a negative message to the market. This has created downward pressure on the market. We have already written to Bangladesh Bank requesting to include DBA in the merger process. We will continue to work in the interest of investors, and we hope that the market will return to its own pace soon.”