Panic selling sends stocks to steepest single-day drop in six years

The benchmark index of the Dhaka Stock Exchange (DSE) suffered its steepest single-day fall in six years today (8 March) as escalating geopolitical tensions in the Middle East triggered panic selling across the market.

The DSEX index plunged 231 points, or 4.42%, to close at 5,008, hitting a two-month low and marking the biggest one-day decline since the Covid-19 pandemic era. The previous steepest fall was recorded on 9 March 2020, when the index dropped 279 points during global market turmoil caused by the pandemic.

The blue-chip DS30 index also came under heavy pressure, losing 91 points, or 4.55%, to settle at 1,919.

The sharp correction reflected widespread selling as investors rushed to cut losses amid growing uncertainty over global energy markets and the potential economic fallout for Bangladesh.

Market breadth was overwhelmingly negative. Of the traded issues, 371 declined, while only 10 advanced and nine remained unchanged, illustrating the scale of the sell-off.

Despite the slump in prices, trading activity increased as investors scrambled to exit positions. Turnover rose 16% to Tk532 crore during the session.

The panic-driven fall also wiped out a significant portion of market value. The overall market capitalisation of the Dhaka bourse declined by Tk13,400 crore to Tk6.84 lakh crore in a single trading day.

Major banking and blue-chip stocks exerted strong downward pressure on the index. Among the biggest draggers were BRAC Bank, Islami Bank, Square Pharmaceuticals, City Bank and BAT Bangladesh, which collectively accounted for a large share of the index's decline.

Negative sentiment also spilled over to the port city's bourse. At the Chittagong Stock Exchange PLC, the CSCX index fell 255 points, or 2.81%, to close at 8,805, while the CASPI index dropped 419 points, or 2.83%, to settle at 14,405. Turnover at the exchange plunged 60% to Tk16.37 crore, reflecting a sharp contraction in trading activity.

According to the daily market review by EBL Securities Limited, the capital market continued to witness a bloodbath, with no sign of relief for investors as pessimism surrounding the escalating Middle East conflict intensified.

The brokerage said relentless bearish sentiment gripped the market from the opening bell of the week's first trading session, prompting panic-stricken investors to dump holdings to minimise further losses in their already battered portfolios.

Selling pressure persisted throughout the session, leading to widespread price corrections across most sectors and leaving overall market sentiment deeply uncertain.

The latest fall extended the market's losing streak to four consecutive trading sessions. During this period, the benchmark index has shed a total of 526 points, while the market capitalisation of listed companies has declined by nearly Tk30,000 crore.

The downturn has been largely attributed to rising geopolitical risks following reported strikes involving the US and Israel against Iran, heightening fears of a broader conflict in the Middle East. Investors worry that any escalation could disrupt global energy supplies and significantly raise oil and gas prices.

Moniruzzaman, managing director of Prime Bank Securities, told TBS that the conflict has already pushed global oil and gas prices higher, raising concerns that Bangladesh's import bill could increase substantially.

He warned that disruptions to fuel imports could affect power generation and industrial production, particularly as the country approaches peak electricity demand during the summer months. A slowdown in industrial activity, combined with rising energy costs, could further intensify inflationary pressures.

Amid such uncertainty, investors opted for caution, triggering broad-based selling across nearly all sectors of the market. Moniruzzaman added that trading is likely to remain volatile in the coming sessions, depending on developments in the Middle East and movements in global energy markets.

Investor anxiety was further fuelled by recent domestic developments. On Sunday, the Bangladesh Energy Regulatory Commission increased the price of Jet A-1 aviation fuel for March, setting the rate for domestic flights at Tk112.41 per litre.

Market insiders said fears of a broader fuel price hike are spreading as global energy prices rise amid supply disruptions. Reports that energy exporters such as Qatar, Oman and Kuwait have declared force majeure on certain shipments have heightened concerns about Bangladesh's fuel imports.

They also noted that scenes of vehicles queuing at filling stations amid fears of potential shortages have further unsettled investors, contributing to panic in the stock market.

Analysts said the situation has been compounded by the lack of clear policy direction to stabilise the market. While several countries have introduced tax cuts on fuel or support measures for financial markets to cushion the shock, investors in Bangladesh are still waiting for concrete steps to restore confidence in the capital market.