DSE climbs to 3-month high on reform hopes

The benchmark index of the Dhaka Stock Exchange (DSE) climbed to a three-month high on Monday as investors returned from the Eid holidays with renewed optimism, betting on undervalued blue-chip stocks.

The equity market was upbeat against the backdrop of a series of policy measures aimed at reviving economic activity and strengthening the capital market, overlooking the latest increase in fuel prices and a stricter dividend policy for banks announced by Bangladesh Bank.

The government on Sunday night raised the retail prices of octane, petrol and kerosene by Tk 5 per litre, marking the second fuel price increase in six weeks. The central bank tightened dividend rules, allowing only banks with paid-up capital of at least Tk 20 billion to declare cash dividends from 2026.

The developments appear to have made no visible impact on equities on Monday.

Market insiders said investor optimism was driven by the newly announced Tk 600 billion refinancing package to support industrial revival, recent policy easing for foreign investors and the finance minister's pledge to introduce major reforms in the capital market within the next two months.

"Improved domestic cues and repeated political commitments toward capital market development boosted investor confidence and encouraged investors to take positions in attractively valued stocks," said Md Sajedul Islam, a director of the DSE.

The market extended its winning streak for a sixth straight session on Monday, with broad-based buying interest pushing share prices higher across most sectors.

The DSEX, the benchmark index of the premier bourse, rose 36 points, or 0.68 per cent, to close at 5,373 - its highest level in three months. The index has gained about 170 points over the past six trading sessions.

The DS30 index, comprising leading blue-chip companies, advanced 14 points to 2,044, while the DSES index, which tracks Shariah-based stocks, gained four points to 1,086.

According to EBL Securities, sustained interest in selective high-momentum stocks with perceived upside potential continued to drive the market upward.

Finance and Planning Minister Amir Khosru Mahmud Chowdhury recently reiterated the government's commitment to reforming the financial sector, saying political appointments in banks, regulatory bodies and financial institutions would no longer be allowed.

"In the next two months, you will see changes in the capital market," the minister said at a seminar before Eid. "We will undertake all necessary deregulation measures for the market."

Market participants viewed the remarks as a positive signal for long-awaited reforms. "When the finance minister publicly commits to developing the market, investors gain confidence," said Mr Islam, also the managing director of Shyamol Equity Management.

Akramul Alam, head of research at Royal Capital, said investors were increasingly accumulating fundamentally strong bank stocks, which traded at attractive valuations.

The banking sector received a boost from Bangladesh Bank's Tk 600 billion refinancing scheme unveiled last week to stimulate private-sector credit growth, revive industrial activities, support small and medium enterprises and accelerate economic recovery.

Although the package is not directly targeted at the stock market, analysts believe it could positively affect listed companies, particularly in the banking, textile, engineering, pharmaceutical and export-oriented sectors.

"Banks are expected to play a central role in channelling the funds, which could strengthen lending growth and interest income," Mr Alam said.

"If the refinancing scheme succeeds in generating new investments, creating jobs and increasing industrial output, the positive effects will eventually be reflected in the capital market," he added.

Banking stocks led the market rally on Monday. Shares of BRAC Bank, Pubali Bank, City Bank, NCC Bank and Jamuna Bank collectively contributed around 17 points to the benchmark index's gain.

Investors also welcomed a significant regulatory easing designed to facilitate foreign participation in the capital market, said Mr Alam.

Foreign investors will now need to provide a tax certificate only once before repatriating funds from Bangladesh.

On Monday, market participation remained strong, with turnover on the DSE rising to Tk 9.12 billion, compared with Tk 7.78 billion in the previous session.

Gainers outnumbered losers on the DSE floor. Of the 386 issues traded, 179 closed higher and 152 ended lower, while 55 remained unchanged.

Major sectors posted positive performance. The banking sector posted the highest gain of 1.4 per cent, followed by engineering, power, telecom and pharma.

NCC Bank became the most-traded stock, with shares worth Tk 441 million changing hands, closely followed by BRAC Bank, BBS Cables, City Bank and Golden Son.

The Chittagong Stock Exchange also ended higher, with its All Shares Price Index (CASPI) rising 61 points to 14,970, while the Selective Categories Index (CSCX) surged 45 points to 9,215.

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