Late-session sell-off drags DSEX as insurance margin row rattles investors
Margin lending debate and global tensions dent confidence on Dhaka bourse.
The country's premier bourse returned to negative territory yesterday as a sharp final-hour sell-off erased early intraday gains.
The benchmark DSEX index, which had successfully scaled past the 5,900-point threshold during the mid-session, ultimately succumbed to broad-based selling pressure, ending a volatile day with a 27-point decline.
The DSEX settled at 5,871 points, reflecting the growing anxiety among investors regarding proposed regulatory changes and escalating geopolitical tensions in the Middle East.
The blue-chip DS30 index followed suit, edging down by 3 points to close at 2,216.
Despite the fall in indices, market participation remained healthy, with turnover rising by 7% to reach Tk1,211 crore.
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The insurance margin controversy
The market's volatility was primarily driven by controversy over the Bangladesh Securities and Exchange Commission's (BSEC) proposal to tighten margin lending rules for the insurance sector.
The draft rules, recently released for public feedback, have divided market participants.
The managing director of a leading brokerage firm told The Business Standard that influential investors, who have historically driven rallies in insurance stocks, are unhappy with the proposal.
"Rumours that the stricter rules are already a done deal have triggered panic among investors holding insurance scrips," he said.
However, more conservative investors support the move, arguing that excessive margin lending was a key factor behind the 2010 stock market crash.
Amid growing concerns, the BSEC recently clarified in a press release that the rules remain in the draft stage and will be finalised only after reviewing public feedback.
Market pulse and sectoral movement
According to the daily market review by EBL Securities, the market pulse was positive for most of the day, with the DSEX briefly reclaiming the 5,900-mark.
However, the sentiment soured in the final hour of trading.
"Investor caution prevailed due to unsettled policy uncertainties and the renewed escalation of conflict in the Middle East, which continues to weigh on the global risk appetite," the brokerage house stated.
The market breadth remained bearish, with 245 issues declining compared to 100 that managed to advance, while 44 remained unchanged.
The general insurance sector was the day's biggest laggard, dropping by 2.4%, followed by travel and life insurance.
In contrast, the mutual fund sector provided a rare silver lining, surging by 3.8%, while the food and telecommunication sectors posted marginal gains.
Top movers and draggers
The day's downturn was driven by corrections in heavyweight scrips, including LafargeHolcim Bangladesh, Square Pharmaceuticals, Walton, BSRM Limited, and Power Grid.
Textile stocks led turnover, accounting for 16.6% of the day's volume, followed by pharmaceuticals and mutual funds.
Among individual stocks, MBL First Mutual Fund hit the 10% upper circuit, followed by Prime Finance, BIFC, and Exim Bank First Mutual Fund. Premier Bank was the day's worst performer, losing 8.77%, followed by Usmania Glass and Sonar Bangla Insurance.
The bearish mood also prevailed at the Chittagong Stock Exchange (CSE), where the Selective Categories' Index (CSCX) fell 19 points to 9,633 and the All Share Price Index (CASPI) dropped 20 points to 15,778. Turnover at the port city bourse also remained subdued.
