Dhaka stocks extend losing streak on investor anxiety, political rumours

Infographic: TBS

Dhaka stocks suffered a sharp selloff yesterday, with the benchmark DSEX index plunging by 81 points, or 1.53%, to close at 5,202 – its lowest level in more than two months.

The decline marked the fifth consecutive losing session, during which the benchmark index of the Dhaka Stock Exchange (DSE) shed a total of 245 points. The market capitalisation also dropped by around Tk16,500 crore over the same period.

The blue-chip DS30 index fell by 34 points, or 1.70%, to 1,998 yesterday, while the shariah-based DSES lost 13 points to 1,140. 

Market breadth remained deeply negative, with 311 issues declining against only 47 gainers, while 38 remained unchanged. 

Despite the persistent slump, turnover edged up slightly to Tk542 crore, compared to Tk530 crore in the previous session.

Market analysts and brokerage executives attributed the extended downturn to a combination of investor anxiety over ongoing political rumours, regulatory uncertainty, and sectoral stress in the banking and non-bank financial sectors.

Ashequr Rahman, managing director of Midway Securities, told TBS that the recent selloff was largely triggered by growing concerns among investors following several discouraging developments in the financial sector. 

"The market has been under pressure for the last five sessions, mainly due to a mix of rumours and the fall of bank stocks. Investors are worried after the message from the Bangladesh Bank that there will be no compensation for shareholders following the merger of five banks," he said.

Ashequr explained that this announcement prompted panic-driven sell orders from retail investors, particularly in banking stocks. 

He noted that another set of rumours surrounding potential regulatory actions has further shaken investor confidence. 

"There is a discussion that the Bangladesh Securities and Exchange Commission (BSEC) is preparing to take strong action against several institutions and individuals linked to alleged irregularities in a company's IPO process. This has caused many institutional and high-net-worth investors to adopt a wait-and-see stance," Ashequr said.

According to market sources, the speculation involves former BSEC commissioner Arif Khan, several investment banks, and audit firms allegedly facing suspensions and penalties. While no official confirmation has been made, the rumours have been enough to trigger caution across the trading floor.

Moniruzzaman, managing director of Prime Bank Securities, said investors may have reacted negatively, prompting the market's downward trend, as news has spread that the margin rules might be amended and finalised without considering stakeholders' opinions.

Adding to the unease, Akramul Alam, head of research at Royal Capital, said the market also reacted negatively to political rumours that circulated overnight.

"A wave of panic swept through investors due to rumours about the political situation. Some opportunistic players are believed to be exploiting the confusion to push prices down and buy fundamentally strong stocks at cheaper rates," he said, adding that such movements are temporary and that the market is expected to stabilise once clarity returns.

In its daily review, EBL Securities said sellers dominated the trading board as investors opted to remain cautious during the earnings season. "Corrections extended across most sectors since investors preferred to stay on the sidelines amid worries about regulatory measures and the overall market momentum," it said.

Banking, engineering, and financial institutions led the decline yesterday, with NBFIs suffering the steepest sectoral loss of 2.40%, followed by engineering (-1.98%), banks (-1.94%), and food and allied (-1.56%).

Among major draggers were BRAC Bank, Walton, City Bank, Beximco Pharmaceuticals, and BAT Bangladesh.

Meanwhile, CVO Petrochemical, Pragati Life Insurance, Pragati Insurance, Simtex Industries, and Rupali Life Insurance topped the turnover chart.

Simtex Industries surged 9.87%, becoming the day's top gainer, while Pragati Life Insurance and S Alam Cold Rolled Steels rose by 8.71% and 6.07%, respectively. 

On the other hand, Bangladesh Industrial Finance Company (BIFC) fell by 9.37%, followed by Peoples Leasing, Social Islami Bank, and Samata Leather, all of which lost more than 8%.

Market insiders believe that while short-term volatility may persist due to political and regulatory tensions, investor confidence could recover once the situation stabilises and corporate earnings announcements resume later this month.