Stocks rally for fourth week on easing tensions, macroeconomic optimism

The equity benchmark index extended its winning streak for the fourth consecutive week, buoyed by strong buying in heavyweight bank stocks amid easing domestic and geopolitical tensions.

Market analysts said improved macroeconomic indicators, including robust foreign exchange reserves, rising exports, and record remittance inflows, have significantly boosted investor sentiment.

The rally was largely driven by sharp gains in bank stocks, reflecting renewed investor confidence as local and global tensions subside, a senior analyst said.

Falling inflation and declining yields on government securities have also encouraged bargain hunters to re-enter the market, anticipating a reversal of the prolonged bearish trend, said a leading brokerage official.

Some key macroeconomic indicators, including remittance and exports, continue to show upward momentum, while inflation and government bond yields are on a downward path, signalling potential easing of interest rates in the money market, he added.

Usually, when the interest rate falls, the equity market gets a boost, said the stockbroker.

The gross foreign-exchange reserves reached $30.5 billion last week after more than two years, backed by the much-awaited release of International Monetary Fund (IMF) loans.

Also, the county's exports grew by 8.6 per cent to $48.28 billion in the just concluded financial year despite economic headwinds while inward remittance recorded more than $30.04 billion in FY25.

As a result, buyers remained on the dominant side as investors chased oversold stocks, which they deemed lucrative at the prevailing price level.

This week saw strong market breadth, with gains in three sessions out of four, while one ended lower amid rising turnover value.

DSEX, the key index of the Dhaka Stock Exchange (DSE), settled the week 61 points or 1.27 per cent higher at 4,894.

The DSEX recovered around 255 points in the past four straight weeks while the market-cap surged by Tk 155 billion to Tk 6.66 trillion during the time under review.

In its weekly analysis, EBL Securities said stocks extended the recovery, driven largely by a sharp rally in bank stocks, fueled by renewed confidence following regulatory measures such as the central bank's decision to merge five troubled Islamic banks.

"The trading floor witnessed buying pressure, driven by quarter-end portfolio rebalancing, while positive macroeconomic developments further boosted investor confidence," said the stockbroker.

This week, price hike of several bank stocks, including Islami Bank, BRAC Bank, Prime Bank, Eastern Bank and Social Islami Bank, pulled the market index up, jointly contributing an 84-point gain to the DSEX.

The blue-chip DS30 index, a group of 30 prominent companies, jumped 16 points to 1,836 and the DSES Index, which represents Shariah-based companies, gained 6 points to 1,065.

Apparently, investor participation increased as the total turnover reached Tk 19.44 billion this week, up from Tk 18.13 billion the week before despite this week's four trading days instead of previous week's five days.

Subsequently, the average daily turnover stood at Tk 4.86 billion, 34 per cent up from the previous week's figure of Tk 3.63 billion.

Investors were mostly active in the banking sector, which accounted for 14.5 per cent of the week's total turnover, followed by the food sector (13 per cent) and pharma sector (12.5 per cent).

The market upbeat vibe lured the investors for buoyancy, particularly in the banking sector, soaring 6.3 per cent, followed by non-bank financial institutions, engineering and general insurance sectors.

Most of the traded issues saw price appreciation, as out of 396 issued traded, 257 saw price hike, 103 ended lower and 36 issues remained unchanged on the DSE trading floor.

BRAC Bank was the most-traded stock with shares worth Tk 972 million changing hands, followed by Lovello Ice-cream, Beach Hatchery, Midland Bank and Square Pharma.

The Chittagong Stock Exchange also ended higher, with its All Share Price Index (CASPI) soaring 228 points to 13,628, while the Selective Categories Index (CSCX) rose 133 points to close at 8,332.

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