Investors flee DSE as panic wipes out Tk6,781cr, DSEX sinks 103 points in a day
DSEX suffers worst single-day fall since new commission took charge.
A severe wave of panic selling gripped the Dhaka Stock Exchange (DSE) yesterday, dragging all indices sharply into the red, with 89% of stocks declining and market capitalisation falling by Tk6,781 crore.
Intensifying risk-averse sentiment and aggressive sell-offs by both institutional and individual investors pushed DSEX, the broad market index, down by over 103 points to close at 5,558, according to bourse data.
Market participants attributed the sharp fall to the ongoing countrywide utility crisis, particularly involving gas and electricity, which has severely dampened investor confidence and driven investors to the sidelines to protect their portfolios from further erosion.
They also pointed to unexpected intervention by the stock exchange regarding large buy and sell orders, which has unsettled major individual investors, prompting many to stay on the sidelines out of caution.
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According to DSE data, this is the first single-day fall of over 100 points in DSEX since the new commission assumed office in June.
On 5 April, DSEX had lost 107 points; since then, the index has seen volatility, but declines had not exceeded 100 points until yesterday. Two and a half months earlier, DSEX had stood at 5,554 points on 22 June, according to data.
Following that, the benchmark index gradually climbed to the 5,900 mark as investor participation rose slightly on hopes surrounding the new chairman and commissioners assuming office at the regulatory body.
However, since 11 August, DSEX has lost 345 points, while market capitalisation has plunged by Tk17,065 crore as market sentiment and investor participation deteriorated due to the issue of changing in margin rules and other factors.
Saiful Islam, president of the DSE Brokers Association of Bangladesh, told TBS, "Overall investor confidence remains shaky due to the worsening energy crisis, with no immediate solutions in sight."
He added, "We have received allegations regarding stock exchange interference in large buy and sell orders. We have taken this seriously, discussed the matter with regulators, and are trying to resolve the issue."
He said due to the alleged market interference, some large investors may have moved to the sidelines. "We are talking with regulators to solve the issue," he stated.
When asked about the nosedive in indices and turnover, Abul Kalam, spokesperson for the Bangladesh Securities and Exchange Commission (BSEC), said the current regulator does not interfere in the market, noting that the market experiences ups and downs driven by the forces of demand and supply.
"We did not detect any suspicious trading in our surveillance regarding the decline in the market. It is normal trading," he said.
89% stocks price down
As per data of the DSE, an 89% stock price declined as massive sell-offs gripped the market since the beginning of the trading sessions yesterday.
Of the traded 389 stocks, 348 stocks prices declined, while 20 advanced and 21 remained unchanged. Of the advanced stocks, mutual funds dominated the gainer chart.
Trading session started on a positive note but did not sustain after two minutes as heavy sell-offs dumped rapidly with panic selling accelerating between 12pm and 2pm yesterday as stop-loss triggers and margin pressures forced investors to offload holdings.
Analysts attribute this sharp pullback to persistent macroeconomic uncertainty, institutional profit-taking, and a lack of fresh triggers to rebuild investor confidence in the short term.
EBL Securities in its daily market commentary said, the capital bourse suffered the brunt of intense selling pressure in the opening session of the week, dragging the benchmark index down by more than 100 points to a two and a half month low, as the market pulse swiftly shifted to a bearish tone amid prolonged uncertainties over a nationwide gas and electricity crisis, along with apprehensions over a sharp downturn in corporate earnings.
"From the outset of the session, the broad index remained on a downward trajectory as sector-wide sell-offs swept across the trading board, reflecting widespread risk aversion among investors. The relentless selling spree intensified in the latter half of the session, triggering broad-based erosion across equities and further weighing on investors' already battered portfolios, it said.
On the sectoral front, Textiles sector accounted for the highest share of turnover by 28.8%, followed by General Insurance 14.2% and Pharma 11.2%.
All the sectors posted negative returns, where General Insurance, Textile and Paper exhibited the most corrections on the bourse.
The port city bourse, CSE, also ended in negative terrain. The Selective Categories' Index (CSCX) and All Share Price Index (CASPI) lost 88.1 points and 171.0 points, respectively.
