DSEX plunges by 1%, worst in recent months

The benchmark DSEX index of the Dhaka Stock Exchange fell sharply 77 points or over 1 percent to close at 7,140 on Tuesday which, according to market analysts, was inevitable after the record rally.

A host of recent regulatory moves made investors cautious, resulting in quick profit-booking on the previous surges, according to brokers.

The session kicked off with a spike, however, the market failed to sustain the gains due to lack of investor interest and the index marched downwards.

Other indices, the Shariah-based DSES index was also down 22 points or 1.43 percent to 1,556 and the blue-chip DS30 index shed 23 points or 0.89 percent to 2,611.

Index-heavy banks, telecommunications, pharmaceuticals, insurers, cement and textile sectors were the major laggards where a sell-off was observed.

Last week, the Bangladesh Securities and Exchange Commission (BSEC) instructed the DSE to investigate unusual price hikes of some fundamentally weak companies with price-to-earnings (PE) ratio of over 40.

On Sunday, the regulator directed the three large-cap firms to increase the free-floating shares by at least 10 percent of the total shares. Walton sponsor-directors need to sell additional 9.03 percent, ICB 6.81 percent, and Berger Paints Bangladesh 5 percent within a year.

“The risk-averse investors preferred for booking quick profits, pulling the market down,” said a stock broker.

The PE ratio of some stocks crossed 21, which is concerning. Investors should avoid those stocks, he added.

However, the market bellwether banking sector’s PE ratio is still low, which is around 8 but the PE ratio of low-cap sectors such as tannery, travel and leisure and paper and printing was too high, said an analyst at a brokerage firm.

The participation in trading remained stagnant as the turnover stood at Tk 2,097 crore, slightly up from Tk 2,040 crore. The NBFI sector dominated the turnover chart making up almost 15 percent of total turnover.

Losers took a strong lead over the gainers as out of 376 issues traded, 300 declined, only 52 advanced and 24 remained unchanged.

LankaBangla Finance was the most traded stock, followed by Beximco Ltd, Beximco Pharmaceuticals, Paramount Textiles Limited, Walton Hi-Tech Industries and BATBC.