Selloff did not let stock indices sustain above their previous close on Sunday.
DSEX, the broad-based index at the Dhaka Stock Exchange (DSE), extended its losing streak for the fifth consecutive session to close at 7,186, the lowest in 32 days.
The index had hit its record high of 7,410 on 11 October and nosedived out of profit-booking fear as investors found multiple factors together that might hurt the market confidence after an outstanding rally over the previous 15 months.
Equity analysts and stockbrokers said the factors that had fuelled the rally now seem to be weakening gradually on top of the central bank's increasing caution regarding the stock market.
The downward pressure on interest rates is not here anymore and rates are likely to have rock bottomed already, said an analyst at a brokerage firm.
As soon as the Bangladesh Bank, a few weeks ago, set the floor on interest rates against fixed deposits at per inflation rate, savers began to find it acceptable to put their surplus money into banks, he added.
Later, the government slightly lowered rates against subsidised national savings certificates, but it proved insufficient to put a downward pressure on interest rates, said the analyst.
Savings certificate rate cuts failed to recover stock investors' confidence regarding the market trend, especially when the government said that the rates might be revised upward if needed.
A stockbroker said the interest rate sensitivity seems to be higher now mainly because of the index position after it more than doubled since mid-2020.
"Investors are fearing for a further selloff and are desperately trying to liquidate some of their stock holdings," he explained the sellers' behaviour nowadays.
Brokerage firm EBL Securities wrote in their daily market commentary on Sunday, "Rising inflation, depreciation of the currency, and decline in remittance inflow also made investors edgy on the trading floor."
The rising global commodity price is hurting limited-income people's daily life and also may hurt corporate earnings in the coming days, especially for the manufacturing industries.
Earlier, Covid-19 resilience of the economy and a large number of listed firms impressed investors and now they are fearing the ongoing cost escalation of businesses, said another stockbroker.
"Many have favoured being on the side-line and observing the market trend," said EBL Securities. "Investors were also reluctant in fresh investments due to consecutive corrections as they believe that the market may decline further as the previous bull run had overheated the market earlier."
Amid a hope for market recovery on Sunday, instead, DSEX slipped by 56.8 points or 0.78%.
Blue-chip index DS30 fell by 0.51% as some large-cap stocks such as British American Tobacco gained.
But the Shariah index DSES dropped by 1.34% amid an aggressive selloff.
Over the last five sessions, the DSEX fell by 181 points to drag down the DSE market capitalisation to Tk5.77 lakh crore from Tk5.83 lakh crore.
Investors' participation in the bourses dropped significantly over the last week amid the reluctance of buyers. On Sunday, increased selling pressures pushed DSE's daily turnover up by 15.45% to Tk1,655 crore.
Out of the 376 issues traded, 65 advanced, 287 declined, and 24 remained unchanged at the DSE.
Indices at the Chittagong Stock Exchange also closed in the red territory.