Dhaka stocks retreated on Thursday, as a 20-taka-per-litre fuel-price hike and high borrowing costs weighed on investor sentiment. The market had rallied for two days but lost momentum after the government’s latest fuel increase.
The Dhaka Stock Exchange’s benchmark index fell 18 points, or 0.32%, to 5,578. The blue-chip DS30 index dropped 10 points to 2,112, while the Shariah-based DSES index declined three points to 1,115.
Fuel-price hike adds to investor concerns
The government’s fuel-price increase has emerged as a major concern for the equity market. Md Sajedul Islam, a shareholder director of the DSE, said the hike could squeeze profit margins for listed companies, as higher transport, production, and distribution costs take their toll.
“The market was already under pressure, while the latest fuel-price hike emerged as a major concern for the equity market because of its potential impact on corporate earnings,” Islam said. He added that the increase could slow earnings growth for many companies in the coming quarters.
High borrowing costs and global oil-price volatility
The Bangladesh Bank’s decision to maintain its policy rate at 9.5% until December has reinforced fears that borrowing costs will remain raised. This could limit the scope for an investment-led recovery and make fixed-income instruments more attractive to risk-averse investors.
Md Akramul Alam, head of research at Royal Capital, identified three immediate risks facing investors: higher fuel costs, expensive credit, and uncertainty over global oil prices. “Any sustained increase in operating costs can squeeze corporate profitability,” he said.
Global oil-price volatility has also kept energy costs on investors’ radar. Brent crude climbed back above $100 a barrel, reaching around $104 on Thursday. This renewed increase is likely to impact energy-importing economies like Bangladesh.
The Chittagong Stock Exchange CSE, however, bucked the trend, with its All Share Price Index gaining 41 points to 14,912.
Market sectors and trading activity
Most sectors closed lower, with fuel-sensitive sectors among the major laggards. Travel, ceramic, and cement stocks fell 1.2%, 1.2%, and 1.1%, respectively. However, mutual funds and general insurance gained around 2% each.
Trading activity weakened, with total turnover on the prime bourse falling 10.5% to Tk 7.6 billion. The lower turnover suggests investors remain reluctant to invest fresh funds amid heightened uncertainty.
The market’s decline was driven by price falls in several large-cap stocks, including Pubali Bank, BAT Bangladesh, United Commercial Bank, BRAC Bank, and Eastern Bank. These stocks accounted for more than half of the day’s decline in the DSEX.
The most-traded stock was IPDC Finance, with shares worth Tk 236 million changing hands. Other active stocks included GQ Ball Pen, Square Pharmaceuticals, Envoy Textiles, and Sharp Industries.
Market forces and investor behavior
Market participants attributed the renewed weakness to a combination of factors, including higher domestic fuel prices, tight monetary conditions, and global oil market pressures. The market opened firmly but lost momentum as selling pressure increased, reflecting investor concerns about rising operating costs and borrowing rates.
