Stocks slip below 5,700 points after 35 months

Stocks in Bangladesh suffered a massive setback yesterday with the benchmark index of the Dhaka Stock Exchange (DSE) falling below 5,700 points for the first time in 35 months as nervous investors sold their scrips.

This led to the price erosion of large-cap stocks, bringing down the benchmark index of the country's premier bourse by 77.08 points, or 1.33 percent, to 5,686 points, its lowest level since May 9, 2021.

Beacon Pharmaceuticals, the British American Tobacco Bangladesh Company, Renata, Olympic Industries, BRAC Bank, LafargeHolcim Bangladesh, Mercantile Bank and Pubali Bank were among the large-cap scrips that suffered the biggest losses.

Beacon Pharmaceuticals was the top dragger of the index, claiming 5 points, followed by British American Tobacco Bangladesh with 4 points, according to LankaBangla Securities.

The market dropped as investors panicked seeing the continuous fall of market indices, said a top official of a leading stock brokerage.

Foreign investors are still selling shares, so blue-chip stocks are falling even though these stocks are already traded at a very low price.

And as these stocks have been falling for the past few days, some brokerage houses are selling them by executing forced sales, he added.

If brokerage houses and merchant banks lend funds to investors to buy stocks and the stock price falls massively, then the brokers first call the investors to repay their loans or otherwise sell their shares in what is called forced sales.

The DSES, the index that represents shariah-compliant companies, shed 1.26 percent to close at 1,246 points yesterday while the DS30, which comprises blue-chip stocks, plunged 1.13 percent to 2,014 points.

However, daily turnover, which indicates the volume of shares traded during the session, increased 8.29 percent to Tk 522 crore compared to the previous trading session.

Almost all sectors closed in negative territory, with the non-bank financial institution, paper and printing and mutual fund sectors shedding the most, as per the daily market update of UCB Stock Brokerage.

The pharmaceuticals sector dominated the turnover chart, accounting for 18.98 percent of the total.

Of the issues traded at the DSE, the values of 29 increased, 342 decreased, and 24 did not see any price swing.

Asiatic Laboratories took pole position on the top gainers' chart with a rise of 9.96 percent followed by Dutch-Bangla Bank with 7.20 percent, Heidelberg Cement Bangladesh with 6.19 percent, Salvo Chemical Industry with 5.11 percent and IFAD Autos with 4.50 percent.

Best Holdings, HR Textile, Sikder Insurance Company, Shyampur Sugar Mills and First Janata Bank Mutual Fund also featured on the gainers' list.

Meanwhile, EXIM Bank 1st Mutual Fund shed the most, losing 6.81 percent, followed by IFIL Islamic Mutual Fund-1.

The two were followed by SEML FBLSL Growth Fund, Capitec Grameen Bank Growth Fund, Khulna Printing and Packaging, IDLC Finance, Apex Ternary, and Prime Bank 1st ICB AMCL Mutual Fund.

The Chittagong Stock Exchange saw a similar trend as the Caspi, the main index of the port city bourse, fell by 215 points, or 1.30 percent, to close at 16,244.52 points.

Rajesh Saha, chief executive officer of CAL securities, blamed the country's market situation for the abrupt ups and downs of stocks.

"Outsiders control the stock market in our country. Keeping them in the market, we can't expect a better situation. What is happening in the market, that's a normal thing. The market will not be well until we take back control of the market from outsiders," he said.

"Such things will happen until the market is structured. Look at our neighbouring countries, where markets are structured. Investors do not fear to invest there because no one can dare to earn in the wrong way," Saha added.

He also put forward a slew of suggestions to develop the market.

"We have to bring IPOs to the market in a proper way. So, we have to bring the companies under proper regulations. If any company breaches any rules, the regulatory body has to slap stiff punishments on them," Saha said.

"But in our market, we clearly understand what is happening and what will happen in such a situation. The shares we bought we are now selling out of fear," he added.

Saha pointed out that in developed countries, it is seen that there are some companies which are financially sound.

"So, investors pass their money to those companies if they get any indication of a bad situation. But we have no such places or companies in our market," he said.

"In our country, people see earning is tough through traditional ways. So, they choose poor stocks and try to chalk up more earnings. Our regulatory body knows well how to tackle the market and what needs to be done for the market's wellbeing," Saha added.