Stocks drop again amid taka’s slide

The stock market index took another nosedive yesterday after Bangladesh Bank devalued the local currency against US dollars, raising concerns among foreign investors of a further depreciation.

The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), dropped 50 points, or 0.79 per cent, to end the trading session at 6,211.

"General investors are panicked as they think the currency devaluation will continue and foreign investors will continue to sell shares. Although participation of foreign investors in our market is low, investors are worried." A stockbroker said

However, the market had managed to break its eight-day losing streak on Monday, when the DSEX rose 118 points.

"General investors are panicked as they think the currency devaluation will continue and foreign investors will continue to sell shares as a result," a stockbroker said.

The taka has depreciated against American greenback amid a decreased supply of the foreign currency.

The latest devaluation comes as the Bangladesh Bank depreciated the inter-bank exchange rate by Tk 0.4 to Tk 87.9 per USD. This is the sixth time the local currency has been devalued this year.

"Although the participation of foreign investors in our stock market is comparatively low, general investors are panicked," he said, adding that until the fear of further devaluation disappears, foreign investors will continue to sell shares.

"Once the fear is gone, then they will invest further so general investors should not be panicked."

Investors are also concerned about a possible intervention in the interest rate as it may also impact the market. The banking sector has maintained a 9 per cent lending rate and 6 per cent deposit rate since April 1 of 2020.

"If the interest rate is raised, then the money supply will be contracted and it will impact the market negatively," he added.

At the DSE, 55 stocks advanced, 278 declined and 43 remained unchanged.

The market reverted to a losing trend despite supportive measures, International Leasing Securities said in its daily market review.

The investors were active in purchasing some stocks at lucrative prices in the morning session, however, the market observed volatility throughout the day.

"The last hour sale pressure from some investors lowered the broad index," it added.

Investor activity was mostly concentrated on pharmaceuticals and chemicals (15 per cent), miscellaneous (12.3 per cent), and bank (11.1 per cent).

Silco Pharmaceuticals topped the gainers with a rise of 6.8 per cent while Silva Pharmaceuticals, Delta Life Insurance, Central Pharmaceuticals, and Golden Harvest Agro Industries also witnessed appreciation.

Sonali Paper & Board Mills shed the most, dropping 27 per cent.