Dhaka Stocks Drop as Energy Shortages Squeeze Company Earnings, DSEX Falls to 5,404

Dhaka's main stock index fell for the second session in three on Monday, as worsening gas and electricity shortages continued to weigh on investor confidence. The DSEX closed at 5,404, down 46.2 points or about 0.85 percent from Sunday's 5,451, according to data from the Dhaka Stock Exchange.

• DSEX closed at 5,404, down 46.2 points, as 303 of 385 traded companies lost value
• Turnover fell more than a fifth to Tk453 crore, among the lowest in recent weeks
• Financial institutions and mutual funds led the sector-wide losses
• Falling treasury bill yields are making some undervalued stocks look more attractive, analysts say

A market stuck in a downward spiral

Of the 385 issues that changed hands on Monday, 303 declined, only 47 advanced, and 35 closed unchanged. That means nearly 79 percent of traded companies lost value on the day, a breadth of selling that traders describe as unusually one-sided even by the standards of Dhaka's recent slump. The blue-chip DS30 index fell 9 points to 2,095, while the Shariah-compliant DSES index bucked the trend slightly, rising 12 points to 1,071.

Turnover, a rough gauge of how much money is actually moving through the market, slid to Tk453 crore from Tk566 crore in the previous session, a drop of more than 20 percent. Textiles accounted for roughly a quarter of all turnover, followed by general insurance at nearly 11 percent and engineering shares at 9 percent, meaning trading activity remained concentrated in a handful of sectors rather than spreading broadly across the board.

Energy shortages start showing up in the numbers

Brokerage house EBL Securities described the bourse as remaining "entrenched in a prolonged downward trajectory" in its daily market commentary. Market participants pointed to a more specific culprit behind Monday's losses: disruptions to gas and electricity supply that have been hitting factory output for weeks and are now starting to show up in the earnings outlook for listed manufacturers.

"The capital market remained entrenched in a prolonged downward trajectory," EBL Securities said in its market commentary, pointing to weak buying interest and speculative trading in overvalued stocks as additional drags on sentiment.

Financial institutions led the sector-wide losses, down 3.6 percent, followed by mutual funds, down 2.9 percent, and general insurance stocks, down 2.7 percent. Jute was the only sector in positive territory, posting a 2.4 percent gain. Among individual stocks, National Bank gained 8.33 percent, GBB Power rose 8.26 percent, and Prime Textile Spinning Mills added 8.21 percent, while three mutual funds, MBL 1st Mutual Fund, Phoenix Finance 1st Mutual Fund, and CAPM IBBL Islamic Mutual Fund, each fell close to the 10 percent circuit limit. Evince Textiles, Beximco, and Sonali Aansh Industries were the most actively traded stocks by turnover.

Monday's market at a glance

Indicator	Monday, 12 Oct	Previous session
DSEX	5,404	5,451
DS30 (blue chip)	2,095	2,104
DSES (Shariah)	1,071	1,059
Turnover	Tk453 crore	Tk566 crore
Advancers / Decliners / Unchanged	47 / 303 / 35	n/a

Why some analysts still see opportunity

Even with the broad-based selling, some analysts argued the slide is creating pockets of value. They noted that treasury bill yields have fallen sharply in recent weeks, a point BD Financial Review covered in detail after the 11 October auction, when yields on 91-day, 182-day, and 364-day bills dropped to between 7.65 percent and 7.89 percent, down roughly 48 basis points from early October. As government paper becomes less rewarding, some fund managers argue that fundamentally sound but undervalued listed companies should, in theory, start attracting more interest, though Monday's trading showed little sign of that shift actually happening yet.

The Chittagong Stock Exchange mirrored Dhaka's weakness. Its broad CASPI index fell 84 points to 14,551 and the CSCX index dropped 53 points to 8,946, on turnover of Tk29 crore.

What it means for you

For retail investors already holding shares in energy-intensive sectors such as textiles, engineering, and spinning mills, the gas and power shortages are a reminder that production disruptions can translate quickly into weaker quarterly results and softer dividend payouts down the line. For those sitting on cash, the combination of a falling market and falling treasury yields is worth watching closely: it narrows the gap between the safety of government paper and the risk of equities, which can eventually pull patient, long-term money back into stocks, even if the near-term mood stays cautious. Anyone deciding between a fixed-income option and the market right now may find it useful to compare current rates using the FDR rate comparison tool before making a move.

For business owners who rely on steady electricity and gas supply, Monday's market reaction is a signal that investors are already pricing in the cost of outages, well before official earnings confirm the damage. It may be worth stress-testing cash flow projections against continued energy disruption through the rest of this quarter rather than assuming a quick fix.