Stocks start week lower as political chaos, rising rates worry investors
Following the two positive days before the last weekend, the market opened higher as non-life insurance stocks rallied
Stock investors, in reaction to the most recent political chaos and the interest rate hike by the US central bank, preferred profit booking on Sunday and that did not let the DSEX, the broad-based index of the Dhaka Stock Exchange (DSE), continue its recovery.
DSEX closed 0.9% lower at 6,334 on Sunday, while the blue-chip index DS30 saw a slower 0.03% fall after the underperformance last week.
Following the two positive days before the last weekend, the market opened higher as non-life insurance stocks rallied. However, the moves by short term profit seekers, to realise some of the gains they had over the last one-two weeks, triggered a price correction in most of the non-life insurance stocks.
"The benchmark index closed in red territory in the first session of the week as cautious investors continued to reduce their capital market exposure owing to prevailing concerns regarding the market momentum and the fear of a resurgence of political movements in the country," brokerage firm EBL Securities wrote in its daily market commentary.
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The downward momentum over the second half of the session prompted risk-averse investors to safeguard their funds from the prevailing market volatility and sit on cash to look for lucrative investment opportunities following the corrections.
Also, the caution across the board caused a decline in investor participation in trading as turnover in the DSE fell by 7.4% to Tk627 crore. General insurance, food, and textile sectors contributed to half of the DSE turnover.
IT, jute, and paper faced the biggest declines in market capitalisation while life and general insurance and textile stocks inched up.
55 of the DSE scrips advanced, and 115 declined on Sunday.
The stock market had the floor price mechanism imposed by the regulator at the end of July last year to artificially hold stock prices amid the economic challenges brought by the Ukraine war.
177 scrips of the 401 DSE scrips were trading freely above the floor prices during the closing bell on Sunday.
CSCX, the broad-based index of the Chittagong Stock Exchange, fell by 0.1% while turnover in the port-city bourse was up by 90% to Tk15.8 crore.
