Stocks extend losing run for sixth day amid rising political uncertainty

Infographic: TBS

The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), fell for the sixth straight session yesterday as cautious investors sold shares and stayed on the sidelines amid election uncertainty and a weak economic outlook.

Concerns over the merger of six banks and new margin loan rules added further pressure, while ongoing earnings and dividend announcements from June-closing companies slowed market activity as investors took a wait-and-see approach.

Today, the DSEX fell by 68 points to close at 4,900, while the blue-chip DS30 index dropped 12 points to finish at 1,929. The Shariah index also declined by 17 points, settling at 1,023.

Market turnover decreased by 4.28% to Tk402 crore, compared to Tk422 crore in the previous session. Out of 390 issues traded, 34 advanced, 329 declined, and 27 remained unchanged.

Market insiders said that ahead of the upcoming national election, major investors are adopting a wait-and-see strategy.

This cautious stance has resulted in lower market participation and reduced turnover, creating continuous pressure on the stock indices. Besides, new tightening margin rules also affected the market along with current merger issues. 

Insiders noted that political uncertainty is currently the primary factor driving market sluggishness, affecting economic activities across several sectors. New investment has remained almost stagnant, while imports of capital machinery – crucial for industrial expansion – have fallen sharply. Private sector credit growth has also decelerated, reflecting subdued business confidence.

In addition, many fundamentally strong companies are witnessing de-growth, further weakening overall investor sentiment. The broader economy remains slow, and historically, the stock market tends to remain dull around this time of the year, adding to existing concerns.

An analyst, requesting anonymity, said investors are giving greater importance to political uncertainty, as no stock market can operate normally amid political instability.

He added that interest rates on treasury bonds and bills are rising, while several listed companies are declaring lower dividends. As a result, retail participation in the market is gradually shrinking.

However, the analyst believes investor activity could rebound once political stability improves. Market observers also suggest that any positive political development or sentiment could quickly shift the market outlook and trigger a short-term recovery.

All major large-cap sectors closed in the red today. Non-bank financial institutions (NBFIs) experienced the highest decline at 3.42%, followed by Banks 1.62%, Engineering 0.94%, Telecommunications 0.74%, Pharmaceuticals 0.72%, Fuel & Power 0.62%, and Food & Allied 0.52%, respectively.

Block trades accounted for 2.3% of the day's total market turnover. Summit Alliance Port Limited, which fell by 3.0%, topped the turnover chart with transactions worth Tk27 crore.

The Chittagong Stock Exchange (CSE) also closed lower, with the Selective Categories Index (CSCX) and the All Share Price Index (CASPI) dropping by 36 points and 75 points, respectively.