Stocks extended their losing streak for a second consecutive week, with the benchmark index of the Dhaka Stock Exchange (DSE) falling below the 5,700-point mark as a prolonged energy crisis heightened concerns over industrial output and corporate earnings.
Market operators said persistent gas and electricity shortages continued to weigh on investor sentiment, with factory shutdowns, production disruptions and growing reliance on costly alternative energy sources raising concerns over operating costs and profitability.
The heightened uncertainty prompted investors to reduce their exposure to equities, fearing prolonged production disruptions, higher operating expenses and weaker corporate earnings.
"The country's macroeconomic outlook is facing fresh challenges from the prevailing energy crisis, discouraging investors from putting fresh funds into equities," said Md Sajedul Islam, a director of the DSE.
The gas crisis has already disrupted operations at several industrial units, while some factories have been forced to scale back production or rely more heavily on expensive alternative energy sources to keep operations running.
Adding to investor concerns, the finance minister told the media this week that it could take at least two years to resolve the ongoing energy crisis. Investors are also apprehensive about renewed inflationary pressure in the coming quarter, particularly if elevated energy costs persist.
"These concerns prompted many investors to stay on the sidelines," said Islam, who is also managing director of Shyamol Equity Management.
The market had four trading sessions during the week, as trading remained closed on Wednesday for Eid-e-Milad-un Nabi. The first three sessions saw sharp declines, while the final session edged higher amid sluggish trading.
The DSEX, the benchmark index of the DSE, plunged 130 points, or 2.25 per cent, over the week to close at 5,656 points.
The index has lost 218 points over the past two consecutive weeks, while the DSE's market capitalisation declined by Tk 103 billion during the period.
In its weekly market analysis, EBL Securities said the market extended its losing streak as persistent concerns over the energy crisis, a weakening corporate earnings outlook and cautious investor sentiment continued to weigh on market performance.
The week began with a sharp decline as investors remained concerned about the adverse impact of prolonged gas and electricity shortages on industrial production and corporate profitability. The negative momentum persisted through the subsequent sessions.
According to Sheltech Brokerage, market performance was primarily shaped by persistent selling pressure amid the energy-supply crisis, heightened regulatory oversight through surprise inspections of brokerage houses, and uncertainty ahead of earnings and dividend announcements by companies with June year-end.
Although bargain hunting emerged towards the end of the week, it lacked sufficient conviction to trigger a meaningful recovery, leaving the benchmark index to extend its losing streak to two consecutive weeks, said the brokerage house.
The DS30 index, which tracks blue-chip shares, fell 28 points to 2,135, while the Shariah-based DSES index dropped 24 points to 1,132.
Price declines in several large-cap stocks, including Islami Bank, Pubali Bank, Sharp Industries, Al-Arafah Islami Bank and City Bank contributed more than 29 points to the weekly fall in the benchmark index.
Trading activity also remained subdued, with total turnover falling to Tk 22.86 billion from Tk 45.28 billion in the previous week, partly reflecting the one fewer trading session.
Consequently, average daily turnover plunged 37 per cent to Tk 5.72 billion from Tk 9.05 billion in the preceding week.
The decline in average turnover indicated that investors remained selective and preferred to stay cautious amid uncertainties surrounding the market outlook.
The textile sector accounted for the largest share of the week's total turnover, at 24.8 per cent, followed by general insurance at 12.7 per cent and pharmaceuticals at 10.8 per cent.
Market breadth remained strongly negative, with 342 issues declining against only 35 advancing, while 11 remained unchanged on the prime bourse.
Sharp Industries emerged as the most-traded stock of the week, with shares worth Tk 1.25 billion changing hands. Saiham Textile, Runner Automobiles, Far Chemicals and ML Dyeing followed in terms of turnover.
All sectors ended lower during the week. The textile sector suffered the highest loss of 5.2 per cent, followed by power, food, banking, engineering, pharmaceuticals and telecommunications.
The Chittagong Stock Exchange (CSE) also ended the week sharply lower. Its All Share Price Index (CASPI) plunged 325 points to close at 15,166, while the Selective Categories Index (CSCX) lost 172 points to 9,258.
