Stock returns fall 2%, led by sharp drops in Textile and General Insurance

Stock returns at the Dhaka Stock Exchange (DSE) fell 2% in the outgoing week, led by sharp drops in the Textile and General Insurance sectors, according to the bourse's weekly report.

Driven by broad-based selling pressure amid an ongoing energy crisis and a cautious stance by investors, stocks across 20 out of 21 sectors saw returns decline by 2.09%, with only corporate bonds managing a positive return.

As per DSE data, the textile sector's return fell by 5.16%, the highest among all sectors, followed by general insurance by 4.69%, mutual funds by 4.5%, and the IT sector's return by 4.01%. The telecom sector's return fell by 1.13%, the lowest among all sectors.

Meanwhile, stocks at the DSE experienced a significant downturn over the previous week in terms of indices, turnover and market capitalisation, with the majority of stocks suffering price declines.

Over the last week, DSEX, the benchmark index of the DSE, fell by over 2.25%, or 130 points, followed by DS30, the blue-chip index, by 1.28%, or 27 points, and DSES, the Shariah index, by 2.04%, or 23.58 points.

Market turnover, one of the key indicators of the capital market, fell by 49% to Tk2,286 crore, while average daily market turnover dropped by 36.88%.

Last week, stock trading occurred for four days instead of the usual five due to a holiday.

Market capitalisation, the value of total outstanding shares of the listed companies, dropped by Tk6,494 crore. Of the 388 traded stocks, 88%, or 342 stocks, declined in price, while only 35 stocks advanced and 11 remained unchanged.

EBL Securities, in its daily market commentary, said the capital bourse extended its downward trajectory for the second consecutive week, as persistent concerns over the ongoing energy crisis, a weakening corporate earnings outlook and cautious investor sentiment continued to weigh on market performance.

"The week commenced with a sharp decline as investors remained concerned about the adverse impact of prolonged gas and electricity shortages on industrial production and corporate profitability, which continued to drive negative momentum throughout the subsequent sessions.

"Although the market attempted a slight reversal in the final session on the back of selective buying interest, intermittent selling pressure continued to cap the market's recovery potential as investors remained wary of the prevailing domestic uncertainties," it said.

Investors were mostly active in Textile, followed by General Insurance and Pharma sectors.