The stock market in Dhaka experienced a significant setback on Monday, following the Eid break, as the key index of the Dhaka bourse dropped below the 5,800-mark once again. Investor participation was minimal, with many still away from Dhaka after celebrating Eid in their village homes. Those who participated in trading chose to sell off holdings to prevent further depletion of their asset value. Market turnover fell to a 3-month low of Tk 3.67 billion, marking a 17% decline from the previous session’s tally of Tk 4.44 billion.
Market experts noted a shift to correction mode as investor confidence waned. The prevailing Israel-Iran tensions were cited as a significant factor contributing to the market’s downturn. Retail investors sold their shares out of fear, leading to a sensitive market atmosphere. However, Mohammad A Hafiz, former president of the Bangladesh Merchant Bankers Association (BMBA), expressed optimism about the market’s potential for recovery, stating, ‘This is a sensitive market, but I believe the market will bounce back soon.’
Investors were shaken by the geopolitical crisis’s potential impact on market momentum, leading to a preference for reducing stock market exposure. Concerns over the market outlook and prevailing volatility prompted many investors to remain on the sidelines. The fall of Beacon Pharma, BAT Bangladesh, National Bank, Square Pharmaceuticals, and BRAC Bank significantly contributed to Monday’s market plunge, collectively accounting for 25 points of the key index fall.
The blue chip index DS30, comprising 30 prominent companies, lost 17 points to 2,015, while the DSES index, representing Shariah-based companies, shed 16 points to 1,266. Saiful Islam, president of the DSE Brokers Association of Bangladesh, highlighted panicked investors’ actions, noting that some heavyweight issues had been consistently falling in the previous weeks. Additionally, the growing deposit rates in the banking sector and higher returns from Treasury bonds are attracting savers to the money market over the stock market, contributing to the market’s liquidity crisis.
Tensions in the Middle East following Iran’s attack on Israel have heightened fears of a wider conflict in the volatile region, further diminishing investors’ interest and confidence in stocks. As large-cap stocks continue to decline, the market faces ongoing challenges amidst the prevailing geopolitical uncertainties.
