The index lost 1,100 points in 9 months
The country's prime bourse index dipped 1.07% or 52.03 points on Thursday, bringing the key index to nearly 34-month low to 4,810.21 points due mainly to confidence crisis of investors.
The index hit its lowest after December 01, 2016 when it was at 4,801 points.
The market has been bearish for nine months, shedding 1,100 points in DSEX. The DSE market capitalisation plunged by Tk52,324 crore during the period.
All of the large cap sectors showed negative movement on Thursday. Among the large cap sectors, Pharmaceuticals exhibited lowest negative movement with 0.58% loss while Engineering exhibited highest negative movement with 2.21% loss, said LankaBangla in its daily market analysis.
Market operators and analysts said investors continued their selling spree amid lack of confidence and liquidity crisis in the market. Grammenphone issue of paying huge dues to the government continued to haunt the investors' sentiment, they added.
A stock broker said that the recent drop in the stock market was due to confidence crisis. Financial institutions were suffering from liquidity pressure, so their participation has remained low, he added.
Foreign investors were selling off their shares due to the lack of confidence and depreciation of local currency against the US dollar, he observed.
The net foreign investment plunged to Tk61 crore negative in September after Tk102 crore negative in August. The foreign investors withdrew around Tk680 crore from the market in seven months to September this year.
Former adviser to a caretaker government AB Mirza Azizul Islam, talking to Dhaka Tribune, blamed financial market volatility, approval of weak IPOs, and Grameenphone’s tussle with the telecom regulator over an audit claim for the current situation in the market.
“The continuous fall in the capital market eroded confidence of investors” he added.
Azizul Islam, also a former chairman of stock market regulator BSEC, stressed for bringing in good companies in the market to restore the confidence of the investors.
“When people will find that they can make profit through investing in stocks and will not be harmed by taxation, only then they will come forward to invest more in the market,” he observed.
The stock market suffered as many companies were listed showing their fake healthy financial pictures in their financial statements. But after a few days of listing, the companies' prices did not sustain as their IPO prices were inconsistent with the fundamentals, said Azizul Islam
Talking to Dhaka Tribune, Dhaka Stock Exchange Brokers' Association (DBA) president Shakil Rizvi said the recent fall in the stock prices was due mainly to confidence crisis. He recommended for quality IPOs as an effective tool to address the dull security market.
“If good companies do not apply for IPOs, we must look for them and continue our efforts to bring them in the market,” Shakil said.
“Depreciation of taka against the US dollar may have dampened the mood of foreign investors in the last few months, as it decreased their profitability” he added.
On Thursday, turnover rose to Tk327 crore, the previous day’s turnover was Tk320 crore. The losers took a strong lead over the gainers as out of 353 issues traded, 271 closed lower, 59 advanced and 23 issues remained unchanged on the DSE.