Dhaka stocks sink to 26-week low amid heavy sell-offs

After a slight uptick following a nine-day losing streak, stocks once again plunged into the red today (28 April) amid heavy share sell-offs.

Dragged down by 43 points, the DSEX — the benchmark index of the Dhaka Stock Exchange (DSE) — hit a 26-week low at 4,952 points, the lowest since October last year.

On 27 October 2024, the DSEX had stood at 4,898 points, according to DSE data. Since then, the index experienced fluctuations; however, over the last 10 trading days, stocks fell on nine occasions.

Breaking the losing streak on Sunday, the market observed a slight uptick, supported by gains in several large-cap and blue-chip stocks. 

Although turnover slightly increased to Tk453.79 crore, 61% of stocks saw prices decline amid heavy sell-offs.

Analysts and market insiders attribute the continued bearish trend in the market to the lack of clear instructions regarding provisioning against negative equity and the absence of new funds in the capital market due to high interest rates in other financial instruments.

After the extended deadline expired in January, brokers had requested the extension until 2030 to maintain provisioning gradually.

However, the commission extended the provisioning period only until December this year.

As per the directive of the commission, to avail the facility, stock brokers, merchant bankers and portfolio managers, who have negative equity or unrealised losses, must submit a specific and acceptable provisioning plan, approved by their board of directors, to the commission by 30 June.

Md Ashequr Rahman, managing director of Midway Securities, told TBS, "Brokers have not received an acceptable directive regarding negative equity. With the new extension, many will not be able to avail the facility, which is causing increased selling pressure in the market."

Speaking about the lack of new funds, he said, "The interest rates on treasury bills and bonds are now very high. As a result, a significant amount of investment is shifting towards bills and bonds, which offer assured returns. No new funds are coming into the capital market, leaving the market without the necessary support."

Today, stocks opened on a positive note, but the momentum lasted only seven minutes as heavy share sell-offs gripped the market.

Later, a slight increase in buying activity helped the indices reach intraday break-even points around the middle of the trading session. 

However, renewed selling pressure once again dragged the market indices down by the end of the session.

EBL Securities, in its daily market commentary, said that the benchmark index of the capital bourse failed to sustain its short-lived positive vibe from the previous session as jittery investors resumed offloading their holdings to limit further losses due to a lack of any strong positive catalysts for the market to rebound from its lingering depressed sentiment. 

The report said that although the market opened on a slight positive note, a selling spree soon emerged to fade the initial optimism and dragged down the market indices again to negative territory, with bears regaining control of the market's momentum. 

On the sectoral front, the pharmaceutical stocks exerted the highest by 31.4% in the total turnover, followed by the bank at 11.0% and the fuel & power at 8.9%.

Emerald Oil Industries topped the gainer chart with a 9.18% gain on its share prices to Tk21.4 each, followed by Khan Brothers PP Woven Bag Industries by 8.72% to Tk124.7 each, Mithun Knitting and Dyeing by 6.66% to Tk17.6 each, Fareast Finance by 6.25% to Tk3.4 each and Midland Bank by 5.67% to Tk20.5 each. 

Meanwhile, Progressive Life Insurance toped the loser list as its shares price declined the most by 10.97% to Tk51.2 each, followed by Shahjibazar Power by 9.7% to Tk39.7 each, Union Capital by 8.6% to Tk4.2 each, Prime Insurance by 6.8% to Tk28.7 each, and Oimex Electrodes by 6.6% to Tk25.3 each. 

The port city bourse, CSE, also witnessed a negative session today. The selected indices (CSCX) and All Share Price Index (CASPI) decreased by 10.7 points and 14.4 points, respectively.