Stocks off to a bad start as turnover plunges

Stock exchanges were off to a disappointing start in 2023 as the beginning of a new year failed to cheer investors worried about the persisting uncertainty at home and abroad.  

The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), was down 11 points, or 0.18 per cent, to 6,195 yesterday.

The DS30, the blue-chip index, fell 0.07 per cent to 2,193 while the DSES, the index that represents shariah-based firms, rose 0.23 per cent to 1,355.

Turnover, an important indicator of the market, plummeted 48.4 per cent to Tk 178 crore, the lowest in more than two and a half years. It was Tk 345 crore on the last day of 2022.

Among the traded companies, only 19 advanced, 149 declined and 162 did not see any change.

"Though the market started with an upbeat note, it reversed after a few minutes and witnessed selling pressure from the pessimistic investors amid a confidence crisis as the session progressed," said International Leasing Securities Ltd in its daily market review.

The investors are worried owing to the challenges facing the economy for the Russia-Ukraine war, the energy shortage, higher inflation, declining foreign currency reserves and the dollar shortage.

Moreover, the country also reported a new omicron sub-variant, hurting the already bruised confidence of investors.

All the sectors witnessed price correction except ceramic that rose 0.2 per cent. The IT sector fell 2.2 per cent, the service sector dropped 1.6 per cent and the travel sector was down 1.5 per cent.

Investors' activity was mostly centred on the pharmaceuticals sector, which made up 23.2 per cent of the turnover, the IT sector, accounting for 12.1 per cent, and the engineering sector, representing 12.1 per cent of the turnover. 

After the Bangladesh Securities and Exchange Commission (BSEC) lifted the floor price for a number of companies, it was assumed that these stocks would fall for a few weeks since their prices were high artificially, said a top official of a stock brokerage firm.

The BSEC scrapped the floor price for 169 companies last month and set the circuit breaker in a way that would not allow stocks to drop more than 1 per cent in a single day from the previous day's closing price.

In July, the commission set the floor price of every stock to halt the free fall of the market amidst global economic uncertainties driven by the war-induced crisis.

Though the removal of the floor price may send the index down for a few days or weeks, all of the stocks should get rid of the artificial price support since it is not helpful for the market in the long-run, the broker said.

"The BSEC should not have put in place the floor price in the first place. When the economy of a country is under immense pressure, the price of stocks can't rise," he pointed out.

Islami Commercial Insurance posted the highest appreciation, rising 9.96 per cent. Mercantile Insurance added 3.9 per cent and Bengal Windsor Thermoplastics advanced 1.99 per cent.

Anwar Galvanizing suffered the sharpest fall, sliding 4.88 per cent. E-Generation, Advent Pharma, and Navana Pharmaceuticals dropped more than 3 per cent.

Orion Infusion was the most-traded stock on the day with its shares worth Tk 18 crore transacted. Intraco Refueling Station, Bashundhara Paper Mills, and Orion Pharma also saw significant transactions.

The Caspi, the all-share price index of the Chittagong Stock Exchange, declined 34 points, or 0.18 per cent, to end the day at 18,293.

Of the securities that traded on the bourse in the port city, 13 advanced, 44 declined, and 83 did not show any price movement.

Turnover plunged 70 per cent to Tk 10.42 crore from Tk 34.03 crore a session ago.