The stock market fell into a losing streak once again from December 2nd after steady increases for over six sessions since November 24th, 2019. Both institutional and individual investors had taken risk averse positions in the market on both December 2nd and 3rd, which resulted in the DSEX, the main index of the Dhaka Stock Exchange (DSE), finally ending lower than 4700 points on the 3rd of December, 2019.
After the extremely tumultuous times last month in the stock markets of Dhaka and Chittagong, the last week saw steady constant increases with continued investments along the different sectors, bringing a short lasting overall positive outlook in the market. However, just as market confidence seemed to be rising, both individual and institutional investors went into a selling spree, with a substantial amount of large capital stocks being offloaded.
The DSEX lost 24 points on December 2nd to end the day on 4735 points and this was further compounded on the 3rd of December, when the DSEX lost a further 37 points to end the session at 4697 points, which is a decline by 0.50 and 0.78 percent respectively. Many experts attributed the decline to the aggressive selling of stocks of the large capital companies such as Square Pharma, Grameen Phone, LafargeHolcim, Olympic Industries and United Power over the two days. The stocks of the financial sector also contributed to the decline, as concerns with non-performing loans (NPLs) and the lack of liquidity continued to be on the minds of investors across the board.
The large capital stocks which were being aggressively sold by the investors in the past 2 days, were also credited with the upward trend in the market last week. Institutional and individual investors were looking to make quick profits with the aggressive stance in the market, instead of holding onto the large capital stocks.
Over the last month, the overall turnover has also been quite sluggish in the market. The turnover is also a critical performance indicator of the market and the turnover of the DSE fell by over 14.52 percent at the end of trading on the 3rd of December to close the day at 4,123 million taka. The turnover also fell by over 7.5 percent on the previous days trading. Many experts point to the fact that without the large institutional investors, the market cannot possibly operate to a necessary level.
During the steady increases last week, there were also instances of large individual investors betting big on so called junk stocks, which has been a common occurrence in the market of late. Although the stock exchange regulators and the government have been increasingly working towards trying to eradicate these erratic practices, it seems that they have found it immensely difficult to eradicate such adverse, toxic movements in the market.
The Bangladesh Securities and Exchange Commission (BSEC) have been regularly flagging different stocks in the market, including approving DSE to look into various different companies which have had erratic performances in the market.
The Chittagong Stock Exchange (CSE) has also seen a strong decline at the end of trading on the 3rd of December, with the All Shares Price Index (CASPI) of the CSE losing over 107 points and closing the day at 14,305 points.
The concerns regarding liquidity in the market seem to still be in the minds of the investors and to add to it the government borrowing has seen steady increases. The overall investment outlook in the market seem to be fragile and volatile especially amongst the larger institutional investors, which seemed to adopt a cautious stance in the market.