Stocks ended week lower as Bangladesh Bank's rate hold dampened sentiment

The capital market ended the week in the red as investors, who had hoped for monetary easing to boost the bourse, were disappointed by Bangladesh Bank's decision to leave its key policy rate unchanged.

The benchmark DSEX index of the Dhaka Stock Exchange (DSE) fell 17 points, or 0.31%, to close at 5,578. The blue-chip DS30 index lost 10 points to settle at 2,112.

Decliners outnumbered gainers, with 190 issues falling, 141 rising and 57 unchanged. Turnover at the DSE dropped 11% to Tk756 crore, indicating weaker participation from both retail and institutional investors.

Brokerage firms cited the central bank's rate decision as the main trigger for the pullback.

In its daily review, Sheltech Brokerage Limited said profit-taking picked up as sentiment weakened following the monetary policy stance. Early buying lifted the DSEX to an intraday high of 5,631, but heavy selling soon took over and pushed the index down to an intraday low of 5,578, near which it closed.

EBL Securities said the market lacked conviction about the sustainability of its recent uptrend. The index held steady in the opening hour, but sustained profit-booking wiped out early gains, and a later rebound attempt was not strong enough to withstand widespread selling.

The market reaction came shortly after Bangladesh Bank decided to hold its policy rate steady at 9.5% at the Monetary Policy Committee (MPC) meeting, chaired by Governor Mostaqur Rahman on 23 September. The central bank opted for a cautious stance to assess the macroeconomic fallout from recent domestic and international shocks, including volatile global energy markets caused by prolonged Middle East conflicts and the government's recent domestic fuel price hike.

While the committee acknowledged a downward trend in headline inflation, consumer price growth remains above the target ceiling of 7.50% for FY27. Furthermore, the committee identified the implementation of a new national pay scale as another potential inflationary headwind, prompting the monetary authority to prioritise price stability and monitor impact on inflation and GDP growth before considering rate cuts.

Banking sector heavyweights led the index downturn, with Pubali Bank, BAT Bangladesh, United Commercial Bank, BRAC Bank, and Eastern Bank emerging as the chief index draggers. 

On the sectoral front, General Insurance captured the largest share of daily turnover at 17.8%, followed by Textile at 16.3% and Pharmaceuticals at 13.3%. 

Most sectors closed in the red, with Travel and Ceramic both dropping 1.2%, and IT declining 1.1%. On the flip side, Mutual Funds and General Insurance bucked the trend, both posting 2% gains.

GQ Ball Pen emerged as the most-traded stock of the session, followed by IPDC Finance, Fine Foods, Square Pharmaceuticals, and BRAC Bank. 

CNA Textile led the gainers' chart with a 10% jump, while Sena Insurance (9.97%), Orion Pharma (9.82%), Tung Hai Knitting (7.69%), and Emerald Oil (7.69%) also posted notable gains. 

Conversely, Saiham Textile hit the losers' list hardest, slumping 6.68%, followed by Peoples Leasing, Khan Brothers PP Woven Bag, Premier Cement, and Meghna PET.

Over at the Chittagong Stock Exchange (CSE), performance diverged from the capital bourse. The selective CSCX index gained 17 points to close at 9,147, while the all-share price index, CASPI, jumped 41 points to settle at 14,912.