Stocks break losing streak amid lower participation

Infographic: TBS

The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), halted its continuous decline on Tuesday (11 November) despite lower market participation. Cautious investors continued to sell shares and remain on the sidelines amid upcoming election-related uncertainties and a gloomy economic outlook. 

However, some investors shifted their focus toward undervalued and fundamentally strong stocks, taking selective positions during the volatility.

On Tuesday, the DSEX increased by 12 points to close at 4,873, while the blue-chip DS30 index was up by 7 points to finish at 1,917. 

The Shariah index also rose by seven points, settling at 1,017. Despite this positive moment, market turnover decreased by 4.49% to Tk340 crore, compared to Tk356 crore in the previous session. 

Out of 389 issues traded, 183 advanced, 144 declined, and 62 remained unchanged.

Market insiders said there had been discussions regarding a possible suspension of the recently enforced margin rules. As a result, some investors initially reacted positively. However, due to the lack of official clarification from the court or media, the impact on the market remained mixed. Although the benchmark index closed slightly higher, overall trading activity and participation remained weak.

Ahead of the upcoming national election, major investors are adopting a wait-and-see strategy. This cautious stance has led to lower market participation and reduced turnover, putting continuous pressure on stock indices. Additionally, the newly tightened margin rules, along with ongoing merger-related concerns, have further weighed on market sentiment.

Insiders noted that political uncertainty is currently the primary factor behind the market's sluggish performance, slowing economic activities across several sectors. New investments have remained almost stagnant. Imports of capital machinery – crucial for industrial expansion – have declined sharply. Private sector credit growth has also weakened, reflecting subdued business confidence.

At the same time, many fundamentally strong companies are reporting de-growth, further dampening investor sentiment. The broader economy remains sluggish, and historically, the stock market tends to stay dull around this period, adding to existing concerns.

An analyst, seeking anonymity, said investors are prioritising political uncertainty, as no stock market can operate normally amid political instability. 

He added that interest rates on treasury bonds and bills are rising, while several listed companies are declaring lower dividends. As a result, retail participation continues to shrink.

However, the analyst believes investor activity could rebound once political stability improves. Market observers also suggest that any positive political development or sentiment shift could quickly change the market outlook and trigger a short-term recovery.

Most large-cap sectors posted positive performance today. 

The Non-Bank Financial Institutions (NBFI) sector recorded the highest gain of 1.65%, followed by Banking (0.67%), Pharmaceuticals (0.36%), Telecommunications (0.10%), and Food & Allied (0.05%). However, the Engineering and Fuel & Power sectors declined by 0.80% each.

Block trades accounted for 2.7% of the day's total market turnover. Summit Alliance Port Limited was the most actively traded stock, declining by 1.7% with a turnover of Tk20 crore.

The Chittagong Stock Exchange (CSE) also closed with a mixed trend, with the Selective Categories Index (CSCX) up by 10 points to settle at 8,514, while the All Share Price Index (CASPI) dropped by five points to close at 13,739.