Stocks nosedive as taka depreciates

Failing to sustain recent gains, stocks nosedived on Wednesday.

DSEX, the broad-based index of the Dhaka Stock Exchange (DSE), fell below the 6500-mark again.

Investors aimed at their selling spree towards particular large-cap stocks, taking advantage of the recent price appreciation as they were concerned regarding the recent currency devaluation, wrote EBL Securities.

Stockbrokers and analysts said investors' expectation for a gradual improvement in the macroeconomic situation, reflected through the exchange rate nowadays, seems to have been hurt as soon as the taka further depreciated against the US dollar.

As soon as the Bangladesh Bank loosened its grip on the exchange rate, the interbank rate of the greenback officially soared to Tk106.9 on Tuesday, a double-digit depreciation of the local currency overnight that increased the worries for a worse kerb market situation.

The market was trying to hold on above the previous day's closing value till 12pm, but adamant sellers kept pushing it down till the end of the session.

DSEX dropped 0.77% to close at 6,487 on Wednesday, while the blue-chip index DS30 dropped 0.86%.

Some brokerage officials said misinterpretation of the National Board of Revenue (NBR) Income Tax Paripatra-2022-23 that the tax authority might impose a capital gain tax on individual stock market investors, which was not the fact as the NBR officials later clarified to remove the confusion, also made investors sceptical.

However, the proactive misinterpretation during trade hour might have been done by some proactive large investors who keep hunting non-public information as the circular was published after trading hour, added the stockbrokers.

Only 72 scrips, mostly small-cap ones, advanced, against a decline of 175 while 124 remained unchanged as a large number of them were pushed down to the price floor the regulator introduced at the end of July.

DSEX had recovered to over 6,592 last week from its 14-month low of 5,963 in late July.

Buyers' caution resulted in a drop in trading participation on Wednesday as the daily turnover in the DSE declined by 11% to Tk1,307 crore.

On the sectoral front, pharmaceuticals, miscellaneous and engineering sectors contributed the maximum of 24.2%, 16.5% and 10.4% respectively of the daily turnover in the DSE.

No sector other than jute, tannery, travel and telecommunication could avert the selloff on Wednesday.

Ceramic, service, and cement suffered the biggest corrections – 2.9%, 2.8% and 2.6%, respectively.

The Chittagong Stock Exchange also settled on the red terrain, with daily turnover declining by 39% to Tk21 crore.