Institutions stay on sidelines as Dhaka bourse sinks deeper into red

The Dhaka Stock Exchange extended its losing streak for a fourth consecutive session today (18 December), with market observers pointing to continued inactivity from institutional investors as a key factor behind the deepening downturn.

The benchmark DSEX dropped 22 points to close at 4,831, taking the cumulative loss over the last four trading days to 132 points. The prolonged sell-off wiped out an estimated Tk10,500 crore from the market capitalisation, underscoring the fragile state of investor confidence.

The blue-chip DS30 index also ended lower, shedding 9 points to settle at 1,859.

Turnover, a key indicator of market participation, slipped 19% from the previous session to Tk303 crore, reflecting thinning liquidity and cautious trading behaviour.

Of the traded issues, only 69 advanced while 254 declined and 68 remained unchanged, highlighting broad-based selling pressure across the board.

Market analysts said the bourse remained under stress as political uncertainties continued to weigh heavily on sentiment, keeping large investors away from active participation.

While investors have drawn some optimism from the announcement of the national election schedule and expectations of polls being held in February, the absence of strong institutional buying has prevented any meaningful recovery.

The announcement of the return date of BNP acting chairman Tarique Rahman has also been viewed positively by parts of the market.

However, recent incidents signalling deterioration in law and order, including the assassination attempt on Inqilab Moncho spokesperson Osman Hadi, have renewed concerns and added to risk aversion, analysts noted.

Chief executives of several leading brokerage houses and merchant banks said institutional investors remain largely inactive, preferring to stay on the sidelines until the political and economic outlook becomes clearer.

According to them, there is little fresh demand for shares, while selling pressure persists, particularly from margin accounts, as falling prices trigger forced adjustments. This imbalance between supply and demand has accelerated the downward momentum.

Sector-wise, all major large-cap sectors closed in the red. Food and allied stocks led the decline, followed by losses in fuel and power, Engineering, telecommunication, pharmaceutical, banking and non-bank financial institutions.

Analysts said the lack of institutional support has made it difficult for fundamentally strong stocks to find buying interest, even at lower valuations.

Despite the overall bearish tone, a handful of stocks managed to post gains, largely driven by speculative interest rather than fundamentals.

Familytex and Prime Finance topped the gainers' list, while Tung Hai Knitting, Progressive Life Insurance and BIFC also closed higher.

On the losing side, CVO Petrochemical suffered the steepest fall, followed by Shurwid Industries, Shyampur Sugar, SK Trims and Nurani Dyeing.

The Chittagong Stock Exchange mirrored the Dhaka market's weakness. Its CSCX index fell 38 points to close at 8,403, while the CASPI dropped 69 points to 13,624. Turnover at the port city bourse plunged 22% to Tk4.51 crore, indicating similarly muted participation.