Dhaka stocks slide deeper into red amid political uncertainty

Infographics: TBS

The country's capital market extended its losing streak last week, with share prices sliding sharply as persistent political uncertainty and the continued absence of institutional investors weighed heavily on sentiment, pushing key indices further into negative territory.

The benchmark index, DSEX, of the Dhaka Stock Exchange (DSE) dropped 132 points, or 2.67%, over the week to close at 4,831, reflecting broad-based selling pressure across most trading sessions.

The blue-chip DS30 index also suffered a steep fall, shedding 43 points or 2.28% to settle at 1,859, while the SME-focused DSEMX index declined by 24 points or 2.77% to end at 859.

Out of the traded issues, only 32 advanced, while 335 declined and 22 remained unchanged, underscoring the market's overwhelmingly bearish tone.

According to EBL Securities' weekly market review, the bourse endured persistent downward pressure throughout the week, failing to find any meaningful respite amid a lack of strong catalysts to revive investor confidence.

The brokerage noted that investor anxiety surrounding the unfolding political situation prompted a cautious stance, triggering widespread selling across sessions. As volatility lingered, many investors opted to reduce their exposure in an effort to limit further losses in portfolios already strained by prolonged market weakness.

Market capitalisation also took a hit, declining by around Tk10,500 crore during the week.

 Although trading activity remained relatively resilient compared to recent lows, the daily average turnover slipped by 7% week-on-week to Tk387 crore, reflecting reduced participation from both retail and institutional investors.

Large-cap stocks played a significant role in dragging the indices lower. Islami Bank Bangladesh, BRAC Bank, Beximco Pharmaceuticals, Walton and Grameenphone were among the major index heavyweights that exerted downward pressure, as selling intensified in fundamentally strong but sentiment-sensitive stocks.

Market analysts said political uncertainty continued to overshadow trading decisions, keeping large investors on the sidelines. While some optimism emerged following the announcement of the national election schedule and expectations that polls may be held in February, this sentiment was not strong enough to translate into sustained buying interest.

Analysts also pointed to the announced return date of BNP Acting Chairman Tarique Rahman as a development that parts of the market viewed positively.

However, renewed concerns over law and order dampened whatever optimism had emerged. Recent incidents signalling deterioration in security conditions, including an assassination attempt on Inqilab Moncho Spokesperson Osman Hadi, reinforced risk aversion among investors, analysts said, further discouraging fresh inflows into equities.

Sector-wise, all major sectors posted negative returns during the week. The jute sector suffered the steepest decline, followed by paper and life insurance, as selling pressure intensified across cyclical and defensive segments alike.

Despite the overall bearish environment, investors were most active in the textile sector, which accounted for 16.7% of total turnover, followed by pharmaceuticals with 12.8% and engineering with 12.6%.

A handful of stocks managed to post notable gains amid the market slump, with Bangas, Reliance One Mutual Fund, CAPM IBBL Mutual Fund, BD Welding and Union Insurance emerging as top performers. On the flip side, sharp losses were recorded by several companies, including Shyampur Sugar, Zeal Bangla Sugar, AFC Agro, Khan Brothers PP Woven Bag and FAS Finance, reflecting heightened volatility in smaller and weaker stocks.