Stocks in DSEX suffer significant drop, losing 222 points across seven consecutive trading sessions
The Dhaka Stock Exchange (DSE) experienced a seven-day slump due to weak investor confidence and cautious market sentiment, resulting in a significant decrease in both the DSEX index and market capitalization. However, the market has shown signs of recovery in the days following the slump.
Causes of the Slump
Investors remained cautious amid a general market correction phase, possibly influenced by concerns over macroeconomic factors or short-term uncertainties. Low-performing stocks dominated the gainers' chart during the slump, indicating poor price movement among major assets which discouraged buying. A mixed market breadth with nearly equal numbers of advancing and declining stocks reflected market indecision. Despite some improving macroeconomic fundamentals—such as healthy foreign exchange reserves, rising exports, and record remittance inflows—the market remained subdued during the slump.
Impact of the Slump
The DSEX index lost a significant portion of value over the week, hitting lows around 5,350 points. Market turnover decreased, reflecting reduced investor participation or hesitation to commit fresh funds amidst the falling prices. The market's overall value dropped by several thousand crore taka, signaling a tangible loss in investor wealth.
Market Trends Following the Slump
After the seven-day decline, the market showed signs of recovery: the DSEX index rose by about 35.91 points (0.67%) breaking the losing streak, a positive sign for a rebound. Stocks opened higher, with the prime index gaining over 55 points shortly after the slump ended as investors took advantage of discounted shares. Turnover picked up following the lull, indicating renewed investor interest.
The recovery phase was led by some positive performers like Standard Ceramic Industries while mutual funds and corporate bonds showed mixed performances. Market insiders expect the current trend to persist through this week.
Current Market Status
Today, the DSEX index slipped by 1 point to settle at 5,314. The government's plan to merge weaker banks has reassured the market. With stock market returns currently exceeding 10%, lower government bond yields are making equities more attractive to investors. Bangladesh's foreign exchange reserves have stabilized and begun to rise, easing earlier concerns.
Many listed companies with a June-ending fiscal year remain undervalued, attracting renewed buying interest. Most sectors posted positive returns, with jute (5.6%), tannery (1.3%), and paper (0.8%) recording the highest gains. Cautious investors are actively restructuring their portfolios and adjusting investment plans amid profit-taking and the ongoing correction phase.
Market Indicators
Over the past seven sessions, the DSEX index has shed 222 points. The market's resilience is being driven by a combination of easing economic worries, supportive policy actions, and attractive valuations. The DS30 index rose 6 points to close at 2,057. Pharmaceuticals accounted for the highest turnover at 17.5% in the DSE. Among the 398 issues traded, 121 advanced, 203 declined, and 74 remained unchanged.
The port city bourse, CSE, also had a flat session, with the Selective Categories' Index (CSCX) and the All Share Price Index (CASPI) down by 5.8 points and 15.0 points, respectively. Turnover increased by 5.7% to Tk705 crore compared to the previous session.
Sources: [1] Dhaka Tribune [2] Financial Express [3] The Business Standard [4] The Daily Star [5] Bangla Tribune
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