Turnover at the Dhaka Stock Exchange (DSE) dropped 33% on Monday and stood at Tk467.1 crore – the lowest amount since 29 July, 2020 – owing to the minimal participation of investors throughout the trading session.
Indices at the Dhaka bourse also extended losses for a fourth consecutive session.
Analysts mainly blamed this on investors' caution ahead of the earnings and dividend declarations of financial and multinational companies – as all the financial and most of the multinational companies close their books at the end of December.
The market also lacks a major fresh trigger that can drive a rally following the gains since June 2020 and correction for the last few weeks.
"Investors opted to liquidate their portfolios and decided to sit on their cash in absence of any major trigger in the market, while upcoming dividend declarations by companies closing their books in December kept some investors on the sidelines to observe the market movement ahead," wrote EBL Securities to its research clients after Monday's trade.
Some investors preferred to wait before another stock market debut – by IT sector firm eGeneration – on Tuesday and see how the market behaves.
Since the beginning of the session, the indices either went down or merely tried to find an intraday base and finally DSEX, the broad-based index at the premier bourse, lost 1.66% or 90.77 points to close at 5,385.
Out of the 343 issues traded at the DSE, 23 advanced, 219 declined and 101 remained unchanged.
The fall in the market on Monday was primarily contributed to by selloff in blue-chip companies such as Grameenphone, British American Tobacco and Square Pharma.
DS30, the blue-chip index at the DSE, fell by 2.29% to close at 2,057 points, while Shariah-based index DSES fell by 1.65% to close at 1,222 points.
Beximco Ltd contributed nearly 22.69% of the total turnover at the DSE on Monday. Sellers dominated the stock's trades and Beximco faced a price correction of more than 3% over the session.
On the sectoral front, miscellaneous sectors contributed the highest, 24.44%, of the day's trade. Meanwhile, the pharmaceutical and chemicals sector contributed 12.65% and telecoms 9.85% to the turnover.
Only the engineering sector demonstrated a positive price movement on Monday with a 3% gain in market capitalisation.
The DSEX began to rise from a long-term trough below the 4,000-point mark in mid-2020 and reached as high as 5,971 points in the last month.
As soon as the market capitalisation hit the Tk5 trillion milestone, the market went into correction due to profit booking.
DSE market capitalisation stood at Tk4.6 trillion on Monday.
According to UCB Stock Brokerage's research, the average price to earnings (PE) ratio of the DSE scrips stood at 15.5. This means the annual profits of listed companies are enough to pay back investors' current capital balance within 15.5 years, assuming that profits remain constant over the period.
DSE's average forward PE ratio is at 14.68, according to EBL Securities Research, which indicates that analysts are expecting an improvement in corporate earnings over the coming quarters.
Meanwhile, the Chittagong Stock Exchange (CSE) managed to arrest the fall better with indices losing 1.3-1.6% over the session. Also, the port city bourse saw a 76% jump in trading turnover compared to that of Tk23.5 crore in the previous session.