Another gloomy week for stocks as confidence crisis lingers

Stocks in Bangladesh remained in the red in the past week while turnover dropped over 30 per cent owing to a crisis of confidence among people. 

The DSEX, the benchmark index of Dhaka Stock Exchange (DSE), edged down by 4.94 points, or 0.08 per cent, to 6,215. The DS-30, the blue-chip stock index, dropped 1 point to 2,218.

The benchmark index ended in the negative territory for a second consecutive week as apprehensive investors continued to go on a selling binge of major sectors' stocks, said International Leasing Securities in its weekly market review.

Most investors remained pessimistic and reluctant to make fresh investments in stocks as they could not clearly foresee the market moving in a certain direction, it said.

They preferred holding onto cash ahead of holy Ramadan as they are concerned over where inflation would reach during the month and so their participation was thin throughout the week, it added.

The average turnover decreased by 30.63 per cent compared to that in the previous week to stand at Tk 352.4 crore.

The stock market is suffering mainly due to a confidence crisis of people and absence of institutional investors, said a stockbroker.

The confidence crisis mainly arose from the present macroeconomic scenario that remains depressed amid the Russia-Ukraine war, he said.

So, performances of listed companies may drop. On the other hand, institutional investors are also not buying shares due to the presence of the floor price. "Then, how will the market rise?" he asked.

At the end of July last year, the Bangladesh Securities and Exchange Commission (BSEC) set the floor price of every stock to halt the free fall of the market indices amid global economic uncertainties.

The floor price was the average of the closing prices on July 28 of the year and the preceding four days.

However, in last December, the stock market watchdog lifted the floor price for 169 companies in order to bring vibrancy to the market.

Afterwards, the index started falling every day and so the floor price was reintroduced in March again.

If the floor price prevails in the market and investors do not see any big potential, they will not participate and the index will continue to fall, the broker added.

Over the past week, paper rose 2.9 per cent, jute advanced 2.4 per cent and services grew 2.4 per cent while IT dropped 2.2 per cent, life insurance fell 1.4 per cent and general insurance declined 0.7 per cent.

Investors' activities were mostly concentrated on pharmaceuticals (13.2 per cent), IT (12.6 per cent) and food (12.5 per cent) sectors.

The port city bourse recorded a 21.8 points increase in its broad based index, CASPI.