Stocks climb amid easing political uncertainty

Stocks closed higher in the first week after long Eid holidays, as investor optimism over easing political uncertainty outweighed concerns over the escalating Iran-Israel conflict.

As investors showed buying interest in selective blue-chip shares, key indices posted gains despite ongoing geopolitical tensions in the Middle East.

Market operators said improving investor sentiment is being driven by signs of political stability, particularly after a recent meeting between Chief Adviser Prof Muhammad Yunus and BNP Acting Chairman Tarique Rahman.

At the meeting, Prof Yunus indicated that the next general elections are likely to be held in the week before the start of Ramadan next year -- a significant development that reflects a shift in stance from both sides regarding the timing of the polls.

"Investors showed a renewed buying appetite as the political tension eased after the announcement of the election roadmap," said a leading stockbroker.

Although global stocks plunged due to ongoing Israel-Iran conflict, the Bangladesh stock market somehow managed to stay afloat, buoyed by easing political tensions on the local political front, he said.

Generally investors tend to invest more during the elected government, as they seek long-term policy, something that is generally assured under the elected government.

Moreover, several market-supportive measures in the proposed budget, including the widening of the tax-rate gap between listed and non-listed firms, inspired bargain hunters to invest in selective stocks.

The proposed tax reductions are expected to positively impact the listed firms' profitability across various sectors such as pharma, power, information technology, food & allied, real estate, cement and automobile sectors.

Of the five trading days this week, the market closed higher three days while two sessions ended lower and the dominance of buyers sustained at the end of the week.

The DSEX, the prime index of the Dhaka Stock Exchange, ended the week 45 points or 0.96 per cent higher at 4,754, extending the gains for the second straight week. The DSEX recovered more than 116 points in the past two weeks.

In its weekly market analysis, EBL Securities said the market managed to close in positive for two consecutive weeks after partial easing of political uncertainties due to some clarity regarding the national election timeline.

Alongside, the regulatory initiatives for small-cap companies to comply with minimum capital requirements, also contributed to a modest improvement in investor sentiment, said the stockbroker.

Meanwhile, escalating geopolitical tensions surrounding the ongoing Iran-Israel conflict entered into the second week on Friday, showing no signs of ceasefire.

"If the conflict continues, cost-push inflationary pressure may impact the country's overall business as oil prices have already started to rise due to the ongoing conflict," said the stockbroker.

Bangladesh businesses have already raised concerns, saying the ongoing Middle East conflict may present a fresh challenge.

This week, price hike of selective blue-chip stocks, such as BAT Bangladesh, BRAC Bank, Square Pharma, Grameenphone and LafargeHolcim pulled the market index up as they jointly contributed 25-point rise to the key index.

As a result, the blue-chip DS30 index, a group of 30 prominent companies, rose 20 points to 1,782 while the DSES Index, which represents Shariah-based companies, gained nearly 9 points to 1,038.

The investor participation also rose as the total turnover stood at Tk 16.27 billion this week, up from Tk 9.64 billion the week before.

Consequently, the average daily turnover stood at Tk 3.25 billion, 35 per cent up from the previous week's figure of Tk 2.41 billion.

Investors were mostly active in the food sector, which accounted for 17 per cent of the week's total turnover, followed by the pharma sector (13 per cent) and banking sector (13 per cent).

The market upbeat vibe lured the investors for buoyancy, particularly in food & allied, telecom, engineering, pharmaceutical, banking, and power sector stocks.

Most of the traded issues saw price appreciation, as out of 395 issued traded, 194 saw price hike, 159 ended lower and 42 remained unchanged on the DSE trading floor.

Lovello Ice-cream was the most-traded stock with shares worth Tk 1.51 billion changing hands, followed by Beach Hatchery, BRAC Bank, Agni Systems and Square Pharma.

The Chittagong Stock Exchange also ended higher, with its All Share Price Index (CASPI) gaining 131 points to 13,270; while the Selective Categories Index (CSCX) rose 88 points to close at 8,110.

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