Stocks slide further amid waning confidence

The downward slide of the Dhaka Stock Exchange (DSE) has continued unabated, with major indices falling again yesterday as investor confidence erodes amid deepening economic and regulatory concerns.

The DSEX, the benchmark index of the DSE, lost another 15 points to close at 4,776. The DSE Shariah Index (DSES) declined by 4 points to 1,042, while the DS30, which tracks blue-chip stocks, dropped 8 points to settle at 1,772.

Turnover stood at Tk289 crore, down from Tk293 crore in the previous session, reflecting shrinking investor participation. A sharp sell-off in leading blue-chip firms including British American Tobacco Bangladesh, Grameenphone, Marico Bangladesh, Robi Axiata, Square Pharmaceuticals, and BRAC Bank was largely responsible for yesterday's decline.

The DSEX on Saturday gained 39 points, hinting at a possible rebound. However, those gains evaporated the next day as investors resumed offloading blue-chip stocks amid uncertainty in the economy and capital market.

Market insiders said most long-term investors with clean records have already exited the market and those who remain are mainly day traders and speculative participants, some of whom are suspected of market manipulation. 

The regulator's recent crackdown on such activities has only added to the lull in trading, draining liquidity from both the primary and secondary markets, they said.

"Even fundamentally strong blue-chip stocks are now dumped as investors seek safe avenues," said one broker. "The lack of confidence is pushing the market deeper into bearish territory."

Investor morale had briefly lifted last year following political changes in July and August, but expectations of a capital market revival have faded. Ten months on, there are still no signs of sustained recovery, leading to growing frustration among general investors.

In recent weeks, disgruntled investors have taken to the streets, demanding the resignation of the Bangladesh Securities and Exchange Commission (BSEC) chairman. 

They accuse the chairman of lacking the strategy to restore investor trust. Former BSEC chiefs and market veterans have also voiced concerns about the current leadership's failure to stabilise the market.

Analysts cite multiple headwinds for the continued slump. A fresh hike in gas prices is expected to inflate production costs across industries, deterring investors further. Meanwhile, institutional participation remains weak, while retail investors are steadily pulling out of the market.

EBL Securities, in its weekly commentary, observed that the market remains trapped in a bearish spell, with sustained selling pressure and a crisis of confidence keeping most investors on the sidelines. 

Although some bargain-hunting was noted in selective stocks, it was insufficient to offset the prevailing pessimism, it said.

Sector-wise, the banking sector generated the highest turnover yesterday, accounting for 19.2%, followed by textiles at 12.9% and mutual funds at 11.3%. 

Most sectors posted negative returns, with mutual funds falling by 1.8%, paper by 1.4%, and food by 1.4%. In contrast, the textile sector rose 1.8%, ceramics 0.8%, and travel 0.7%.

Out of 397 issues traded, 200 declined, 121 advanced, and 76 remained unchanged, further reflecting the broad-based weakness in the market.

The port city bourse, the Chittagong Stock Exchange (CSE), also closed in the red. Its Selective Categories Index (CSCX) fell by 13.2 points, while the All Share Price Index (CASPI) dropped 25.1 points, mirroring the gloom at the DSE.