DSEX tops 5,400 after three months on reform hopes, blue-chip rally

The benchmark index of the Dhaka Stock Exchange (DSE) crossed the 5,400-point mark this week for the first time in three months, buoyed by strong buying in blue-chip stocks and renewed investor optimism following a series of regulatory and policy developments.

The broad DSEX index soared 139 points, or 2.60 per cent, to close the week at 5,475. The blue-chip DS30 index also advanced 38 points to finish at 2,068, while the Shariah-based DSES index gained 27 points to close at 1,109.

Over the past three consecutive weeks, the benchmark has accumulated a total gain of 170 points.

The rally unfolded across four trading sessions this week, as the market remained closed on Sunday due to extended Eid holidays. All four sessions closed in the green, marked by heightened investor participation.

Market insiders noted that investors largely shrugged off recent headwinds, such as a fresh hike in electricity tariffs and stricter dividend policies for banks.

Instead, investors focused on repeated political commitments to support the capital market, the announcement of a Tk 600 billion refinancing package aimed at industrial revival, and recent policy relaxations for foreign investors, said the market analysts.

"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.

A major catalyst for the week's bullish sentiment was the restructuring of the capital market regulator. Investor confidence surged during the final session following the departure of the securities regulator's top leadership, sparking anticipation for improved market governance and favorable policy measures.

On Thursday, renowned chartered accountant Masud Khan was appointed Chairman of the Bangladesh Securities and Exchange Commission (BSEC), taking over from immediate past chairman Khondoker Rashed Maqsood, who resigned earlier that day. Three new commissioners -- Md Nafeez-Al-Tarik, Nahid Mahtab, and Tanvir Habib Rahman -- were also appointed to four-year terms.

According to EBL Securities, the investor optimism remained buoyant on expectations of tangible progress over repeated political commitments to capital market development, prompting accumulation in perceived attractively valued stocks.

"Market momentum stayed firmly positive, with investors looking beyond concerns surrounding recent fuel and electricity price hikes and pre-budget apprehensions, supported by a considerable increase in investor participation amid emerging confidence in the market's near-term outlook," said the stockbroker.

Akramul Alam, head of research at Royal Capital, said investors were increasingly accumulating fundamentally strong banking stocks, which are currently trading at attractive valuations.

The banking sector also received a boost from the Bangladesh Bank's Tk 600 billion refinancing scheme unveiled before Eid 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 channeling the funds, which could strengthen lending growth and interest income," Mr Alam said.

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

The central bank recently scrapped the requirement for non-resident investors to submit auditors' certificates after every share sale transaction. Foreign investors will now need to provide a tax certificate only once before repatriating funds from Bangladesh.

Price surge of LafargeHolcim, Beximco Pharma, Pubali Bank, Walton and BSRM, largely contributed to the market index gain. These stocks jointly accounted for 20-point of the prime index.

Market liquidity also improved significantly this week and total turnover amounted to Tk 46.25 billion on the prime bourse while the average daily turnover stood at Tk 11.56 billion during the week.

Investors were mostly active in the engineering sector, accounting for 16.2 per cent of the week's total turnover, followed by pharma (12 per cent) and textile (11.4 per cent) sectors.

Gainers outnumbered the losers on the DSE floor. Of the 388 issues traded, 328 closed higher and 49 ended lower while 11 remained unchanged.

Major sectors posted positive performance. The engineering sector posted the highest gain of 3.5 per cent, followed by power, non-bank financial institutions, pharma, banking and telecom.

NCC Bank became the most-traded stocks, with shares worth Tk 972 million changing hands, closely followed by BRAC Bank, Jamuna Bank, RD Food and Mir Akther Hossain.

The Chittagong Stock Exchange also ended higher with its All Shares Price Index (CASPI) rising 359 points to 15,268, while the Selective Categories Index (CSCX) surged 213 points to 9,382.

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