Stocks continue bleeding amid uncertainty

The Dhaka Stock Exchange (DSE) extended its losing streak for the fifth consecutive session today, with the main index reaching its lowest level in four months as investors remained cautious and hesitant to buy shares due to ongoing market uncertainty.

Market insiders said investors initially gained some confidence in the stock market after former prime minister Sheikh Hasina was ousted from office and left the country. However, this optimism quickly faded due to financial scandals involving the previous government and ongoing economic and political instability.

Since February, the market has been in a bearish phase, further worsened by a proposed 15% capital gains tax on individual investors before the 2024-25 fiscal year budget. This caused widespread panic among investors, leading many to sell off their shares, especially in light of the Russia-Ukraine war and the global economic crisis.

High-net-worth investors have been selling off their shares to avoid the tax burden, and the trend continues. As a result, share prices for most companies have been falling for several months, causing general investors to suffer losses. This has further eroded confidence in the capital market, according to insiders.

Despite the ongoing bearish trend, there are signs of new investment opportunities. With corporate earnings reports for the fiscal year ending in June set to be announced soon, market activity is expected to increase. Positive earnings results could offer investors a chance to profit, potentially revitalising the market.

Rahmat Pasha, managing director and CEO of UCB Stock Brokerage, told The Business Standard that the government should remove the 15% capital gains tax on individual investors for five years. 

He believes such a move would help restore confidence in the market and encourage high-net-worth investors to return to the capital market.

The prime index, DSEX, decreased by 97 points to settle at 5,161 on Sunday. Meanwhile, the blue-chip index, DS30, fell by 34 points to 1,896, while the Shariah-compliant index, DSES, edged down by 19 points to 1,156. 

Turnover on the day increased by 18.1% amounting to Tk362 crore, higher from Tk307 crore in the previous session.

Initially, the indices opened on a positive note, but the gains lasted only five minutes before the market began to decline, continuing the downward trend throughout the session. Large-cap stocks were particularly affected, contributing to the drop in the blue-chip index.

Key stocks that contributed to the decline included BRAC Bank, Robi, Grameenphone, Marico Bangladesh, British American Tobacco Bangladesh Company, Best Holdings, LafargeHolcim Bangladesh, Beacon Pharmaceuticals.

Out of the 400 issues traded on the DSE, 27 advanced, 346 declined, and 27 remained unchanged.

In its daily market commentary, EBL Securities noted that the depressed capital market continued its downturn as investors were rattled on the bourse due to the persistent pessimism and wavering confidence, inducing them to shy away from taking positions in equities while losses continued to mount on their portfolios.

According to the commentary, the market remained sell-dominant throughout the session, as unnerved investors opted to liquidate their holdings to avoid further capital erosion in the absence of any major trigger for the market to bounce back from its current bearish state.

Moreover, media reports about the anticipated Tk3,000 crore sovereign-guaranteed loan to ICB, intended to bolster its position and facilitate liquidity in the stock market, also failed to serve as a positive catalyst to restore market momentum, a brokerage firm noted.

On the sectoral front, bank 26.2% issues exerted the highest turnover, followed by food 14.6% and pharma 12.5% sectors. Sectors mostly displayed dismal returns, out of which paper 5.5%, services 4.8% and travel 4.3% exerted the most corrections on the bourse, while only the financial institution 3.7% exhibited slight gains.

The port city bourse, CSE, also settled on red terrain. The selected indices (CSCX) and All Share Price Index (CASPI) declined by 161.9 and 271.5 points, respectively.