Stocks tumble as gas price hike dampens business sentiment

Infographics: TBS

The country's stock market slumped yesterday (15 April), extending losses for a second straight session, as fears grew that rising gas prices could drive up business costs and fuel inflation.

On the day, the benchmark DSEX index of the Dhaka Stock Exchange (DSE) dropped by 37 points, closing at 5,132 — its lowest level in over two months. Meanwhile, the blue-chip index DS30 declined by 18 points to settle at 1,893.

Over the two-day losing streak, the DSEX shed a total of 73 points, reflecting growing investor anxiety over the potential impact of the gas price hike.

Among the traded issues, 98 advanced, 255 declined and 44 remained unchanged. However, the turnover slightly increased to Tk446 crore.

Meanwhile, the Chittagong Stock Exchange (CSE) also closed in negative territory, with its general index (CSCX) dropping 55 points to 8,753 and the all-share price index (CASPI) falling 100 points to 14,370.

According to market insiders, the cement and textile sectors — being the highest consumers of gas — experienced significant declines in their share prices. As a result, seven textile firms appeared on the day's top 10 losers' list.

SM Galibur Rahman, head of research of Shanta Securities, told The Business Standard, "Although the country's overall macro-economic recovery is taking place business slowness is yet to reverse." 

Businesses are yet to return to their full activities as businessmen are looking for stability, he said. "Credit growth is still low which suggests the sluggish business activities. This is also impacting the stock market."

Galibur further said, "On top of that increase in industrial gas price might also impact the business profitability. However, as the market is trading at a low valuation, we think the market will reverse to an uptrend very soon. We expect to have a good profit growth for this quarter. Thus a market uptrend is expected very soon."

Ashequr Rahman, managing director of Midway Securities, said, "The government's decision to raise gas prices for industries will inevitably increase operational costs, which in turn is likely to negatively impact profits. As a result, business owners are increasingly worried. If company profitability declines, investors will also see reduced returns, and this sentiment is already being reflected in the market."

He further said, "Meanwhile, pre-budget discussions for FY26 are underway with the business community, where the National Board of Revenue (NBR) has indicated that tax exemptions may not be extended in the upcoming budget. In fact, corporate tax rates may be raised in certain sectors. This has created uncertainty among investors regarding the tax outlook.

"On top of that, concerns are mounting over how the tariffs imposed by former US President Trump will be resolved — this too is weighing on investor sentiment."

On Sunday, the Bangladesh Energy Regulatory Commission (Berc) announced a 33% increase in gas prices for new consumers and existing users expanding beyond 50% of their sanctioned load. The new tariff raised the rate from Tk30 to Tk40 per cubic metre for both industrial use and captive power generation.

With this adjustment, new industrial consumers and those scaling up production will now have to pay Tk10 more per unit of gas, adding fresh cost pressures amid a volatile macroeconomic environment marked by high inflation, weak credit growth, and declining investment.

Zaved Akhtar, president of the Foreign Investors Chamber of Commerce and Industry, said in a press note yesterday that predictability and fairness in utility pricing are essential for sustained investor confidence.