The Dhaka Stock Exchange (DSE) experienced its steepest decline in 56 months yesterday, as the benchmark index plummeted by 3.01 percent amid heightened investor anxiety following India's sudden airstrikes in Pakistan -- two nuclear-armed neighbours with a fraught history.

The last comparable plunge in Dhaka stocks occurred on August 25 of 2020, when the premier index fell to 4,781 points. However, turnover that day stood significantly higher at Tk 786 crore.

Yesterday, the DSEX, the benchmark index of the country's premier bourse, dropped by 149.31 points, closing at 4,802.

"The market had remained fragile for some time, but yesterday's drop resembled a freefall," said Md Moniruzzaman, managing director and CEO at Prime Bank Securities Limited.

"No concrete factor can explain this sharp decline -- except the intensifying India-Pakistan conflict."

In striking contrast, the Indian stock market posted gains, with the BSE Sensex rising by 0.13 percent to reach 80,746. Conversely, Pakistan's KSE-100 index slumped by 3.10 percent to 110,047.

However, Moniruzzaman observed that the DSEX's 3.01 percent fall was even more disheartening than that of markets directly affected by the geopolitical conflict.

"Market sentiment has turned distinctly negative. There was significant sell-off pressure triggered by the India-Pakistan escalation, stemming from broader uncertainties regarding the economic outlook of Bangladesh," said a market analyst who requested anonymity.

He noted that indices were already near historic lows, and the latest plunge has further deepened investors' losses.

"This is predominantly a retail investor-driven market, and we are witnessing exaggerated reactions," he added.

The DSES, which tracks Shariah-compliant stocks, fell by 41.92 points or 3.85 percent, closing at 1,047, while the DS30 index -- comprising blue-chip shares -- dropped 40.34 points or 2.20 percent, to 1,793.

Another market analyst remarked, "Today's market was a total overreaction."

Of the 395 issues traded on the DSE, 385 saw a decline in prices, only nine closed higher, while five did not see any price movement.

Baraka Patenga Power Limited appeared as the session's top gainer, rising by 9 percent, whereas Hami Industries PLC became the day's worst performer, shedding 9 percent.

Turnover, which is an important indicator of market activity, declined by 6.1 percent compared to the previous day's trading session, standing at Tk 516 crore.

The banking sector dominated the turnover chart, contributing 22.90 percent of the total market activity.

NRB Bank Limited was the most actively traded share, with a turnover of Tk 37.1 crore.

In its daily market commentary, UCB Stock Brokerage reported that all sectors closed in the negative. Among the worst-hit were paper and printing, jute, and ceramics.

BRAC EPL Stock Brokerage noted that all sectors representing large-cap stocks suffered declines.

The non-bank financial institution (NBFIs) sector experienced the sharpest drop, falling by 4.87 percent, followed by engineering (4.72 percent), fuel and power (2.93 percent), and food and allied (2.44 percent).

The pharmaceuticals sector registered a loss of 2.32 percent, the banking sector 2.23 percent, and telecommunications 2.01 percent.

At the Chittagong Stock Exchange, the CSE All Share Price Index (CASPI) declined by 270.54 points, or 1.95 percent, closing the day at 13,590.

India conducted airstrikes on nine locations in Pakistan, asserting they were targeting "terrorist infrastructure".

The strikes followed an attack in Indian-administered Kashmir two weeks earlier, which left 26 dead -- an act New Delhi attributed to Islamabad, according to Reuters.