Dhaka stocks end week lower on weak investor confidence
Market momentum was subdued throughout the five trading sessions, with four ending in the red, largely due to ongoing earnings and dividend declarations by June-closing companies.
The Dhaka Stock Exchange (DSE) closed the week on a bearish note, with key indices registering a broad-based correction as cautious investors engaged in profit-booking and portfolio rebalancing.
Market momentum was subdued throughout the five trading sessions, with four ending in the red, largely due to ongoing earnings and dividend declarations by June-closing companies.
The benchmark DSEX index dropped by 132 points to close at 5,284. Similarly, the blue-chip index DS30 fell by 49 points to 2,033, and the shariah-based DSES declined by 38 points to 1,134. However, the DSE SME Index (DSMEX) bucked the trend, gaining 95 points to close at 1,064.
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Despite the indices falling, the weekly average turnover rose by 5.97% to Tk657 crore, compared to Tk620 crore in the previous week. The total turnover for the week was Tk3,286 crore. Conversely, market capitalisation slipped by 1.09%, falling to Tk717,126.78 crore.
According to market analysts, the recent downtrend stems from multiple factors, including economic and policy-related uncertainties. They note that during the earnings declaration period of June-closing companies, investors tend to remain cautious, resulting in lower turnover and subdued activity.
Speculation surrounding the Bangladesh Securities and Exchange Commission's (BSEC) upcoming margin lending rules and rumours of potential regulatory actions against some influential investors have also fuelled anxiety in the market. Additionally, the National Board of Revenue's (NBR) recent decision to raise the source tax on interest income from government bonds to 15% from 10% sent a negative signal to investors, further dampening sentiment.
Analysts also noted that the upcoming national elections have created further uncertainty among large investors. Many institutional players are refraining from making major investment decisions, while some are switching their funds to fundamentally strong stocks. Others prefer to stay on the sidelines, waiting for a more stable and predictable political and economic environment before re-entering the market.
Overall, analysts believe that a combination of political and policy uncertainty, regulatory rumours, and cautious investor behaviour has weakened market confidence and reduced liquidity, resulting in a decline in both the indices and overall turnover.
In its weekly market commentary, EBL Securities noted that the capital market continued to experience a bearish phase amid cautious investor sentiment tied to the June-closing companies' earnings declarations. The brokerage firm also noted that a selling spree dominated the week following the government's move to increase the source tax on government and other securities.
However, the report highlighted renewed buying interest in general insurance stocks, driven by optimism over potential business expansion after the central bank's directive allowing exports on open account credit terms with coverage from domestic insurance companies.
Out of the 413 issues traded, declines heavily outweighed advances, with 298 issues falling against 79 that advanced.
Among individual performers, Pragati Insurance led the weekly gainers with a 20.68% rise to Tk77.60, followed by CVO Petrochemical up 18.55% to Tk212.80, and Rahima Food Corporation advancing 17.59% to Tk154.40. On the losing side, Peoples Leasing dropped by 15.38% to Tk1.10, First Finance fell by 14.81% to Tk2.30, and Intech Limited slid by 13.74% to Tk29.50.
Sector-wise activity saw investors most active in general insurance (11.8%), followed by pharmaceuticals (10.0%) and textiles (9.7%). Apart from general insurance (5.1%) and mutual funds (0.7%), all sectors posted negative returns, with the travel sector (-7.0%) emerging as the week's biggest loser.
