DSEX dips below 5000-mark, lowest in 7 months

Infographic: TBS

The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), extended its losing streak to nine straight sessions, dipping below the 5,000-mark — a seven-month low — amid sustained market pressure driven by political uncertainty, high interest rates, and weakening investor confidence.

The DSEX index dropped by 50 points to 4,973 today (24 April), while the DSE Shariah Index (DSES) fell by 16 points to 1,105. The DS30 index, tracking blue-chip stocks, declined by 23 points to 1,845.

During the past nine sessions, the DSEX has shed 233 points, including a steep fall of 50 points on Thursday alone, driven largely by panic selling. Market insiders attribute this panic to growing mistrust in the market, which is deepening investor anxiety.

Md Ashequr Rahman, managing director of Midway Securities, told TBS that the market remains stagnant amid high interest rates, political and economic uncertainty, rising gas prices, and increased corporate loan burdens—factors that have hurt profitability. 

He added that volatility is being fueled by ongoing reforms, bank dividend adjustments, budget concerns, India-Bangladesh transshipment issues, and potential tariff changes. 

Ashequr, however, expressed optimism that regulatory and structural reforms could lead to long-term stability.

Investors in peril

Thousands of retail investors are facing daily losses, with many nearing financial ruins as the downturn continues. Insiders also blame the regulatory commission for failing to protect investor interests, further eroding confidence.

A major factor contributing to the selling pressure is the rising interest rate on government securities, which now appears more attractive than equities. This shift has discouraged many from investing in the stock market.

Additionally, the recent sharp increase in gas prices is expected to drive up production costs, particularly in industrial sectors. As a result, investors are reassessing risks and pulling back from equity investments.

Rahmat Pasha, managing director of UCB Stock Brokerage, told TBS that rising interest rates on government securities and bank deposits have drawn investors away from the capital market, further reducing liquidity. "A significant portion of our clients have shifted their investments to government securities instead of equities," he said.

However, he expressed hope that the situation would gradually improve in the upcoming quarter, as interest rates are expected to decline.

Concerns over the government's ongoing negotiations with the International Monetary Fund (IMF) have also weighed heavily on sentiment. Investors fear the loan could come with strict conditions, adding pressure to an already fragile economy.

Investor uncertainty has deepened further with pre-budget discussions led by the National Board of Revenue (NBR), which have hinted at possible tax hikes. Sectors likely to be affected are facing heightened scrutiny from investors.

Confidence in the Bangladesh Securities and Exchange Commission (BSEC) has also declined, with growing doubts about its ability to effectively stabilise the market.

All these political, economic, and regulatory issues have severely weakened investor confidence, triggering volatility and pushing the DSEX to new lows.

Despite the overall negative sentiment, some investors took the opportunity to buy fundamentally strong, undervalued stocks, while others shifted their funds into blue-chip shares as a defensive strategy. However, institutional investors remain largely inactive, and retail investors are steadily retreating.

High deposit rates, liquidity challenges, limited institutional and foreign participation, and ongoing economic instability—exacerbated by political unrest—continue to be major hurdles to a market rebound.

Despite the downturn, turnover on the DSE rose by 22%, reaching Tk367 crore on Thursday, compared to Tk301 crore in the previous session.

Out of 398 traded issues, 52 advanced, 300 declined, and 46 remained unchanged. Although the market initially showed some gains, it gradually declined throughout the session.

Meanwhile, the Chittagong Stock Exchange (CSE) also closed in the red. The Selective Categories Index (CSCX) fell by 25 points, while the CASPI index dropped by 54 points, further reflecting the bearish trend.