Drops in Dhaka stocks persist as indices record further declines
Market Ends Day with Significant Decline
The Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) experienced a turbulent day, with both major indices closing lower due to selling pressure in heavyweight sectors and investor concerns.
The benchmark DSEX index dropped by 17 points to finish at 5,492, while the blue-chip DS30 index fell by 7.31 points to close at 2,127. The shariah-based DSES index also slipped by 2.83 points to 1,191.
Prime Finance, Bangladesh Industrial Finance Company, Exim Bank, Fareast Finance, and Social Islami Bank ended as the worst performers, contributing to the overall market decline.
Investor confidence remained fragile, with most investors opting for selective trading while adopting a wait-and-see approach. This cautious stance kept the market under persistent pressure. Among the traded issues, 123 advanced, 189 declined, and 84 remained unchanged.
The decline was led by non-bank financial institutions, which dropped by 1.30%, followed by banks with a 1.27% loss. Sectorally, pharmaceuticals, food and allied, telecommunications, and fuel and power sectors also experienced declines of 0.34%, 0.25%, 0.15%, and 0.12% respectively.
The selling pressure was particularly heavy in the banking sector, with most shares plunging due to uncertainties surrounding the proposed merger of five us banks. The specific details about the managers or shareholders of the involved us banks are not clearly detailed in the available sources. However, the Raiffeisenbank Hochtaunus had experienced financial difficulties due to risky real estate lending, leading to a necessary support of 440 million euros by the industry association BVR.
This potential merger has sparked fears among investors, who worry about the financial instability and the history of risky business strategies. There is a concern that this could lead to forced sales of shares and a loss of shareholder influence, especially for minority shareholders. The market uncertainty might provoke some to sell shares quickly, leading to volatility and potential undervaluation of stock in the course of the stock market merger.
The overall market capitalisation fell by Tk681 crore to Tk7.26 lakh crore. Khan Brothers PP Woven Bag was once again the most actively traded stock, joined by Sea Pearl Beach Resort, Summit Alliance Port, Techno Drugs, and Sonali Paper. Turnover on the CSE stood at Tk22 crore, indicating relatively subdued participation. Turnover increased slightly, reaching Tk737.57 crore.
The Chittagong Stock Exchange's CSCX index plummeted by 12 points to finish at 9,465, while the CASPI index tumbled by 18 points to close at 15,415.
In conclusion, the DSE and CSE experienced a challenging day, with both major indices closing lower due to selling pressure in heavyweight sectors and investor concerns. The potential banking sector merger, along with lingering concerns over sectoral performance, has contributed to the market's fragility.
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