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Stocks stayed upbeat for two straight weeks, with the key index of the Dhaka Stock Exchange (DSE) crossing 5,200 on Thursday after three weeks amid renewed optimism.
As the macroeconomic front improved and the central bank kept the policy rate unchanged at 10 per cent for the second half of the current fiscal year, investors regained confidence in the market to some extent.
Analysts believe the Bangladesh Bank's (BB) decision to keep the policy rate unchanged amid falling inflation and Treasury bonds' yields is a positive signal for the equity market.
The central bank unveiled its monetary policy statement on Monday, aiming to foster economic stability by curbing inflation, stabilizing the foreign exchange market and strengthening forex reserves.
By keeping the policy rate unchanged, the central bank has shown a conservative stance on monetary policy. The central bank expressed optimism that inflation would fall to 7-8 per cent by June this year.
Favorable earnings disclosure of some of the well-performing companies also somewhat invigorated the market.
Subsequently, buyers remained on the dominant side as investors chased oversold stocks, which they deemed lucrative at the prevailing price levels.
The DSEX, the key index of the Dhaka Stock Exchange (DSE), finally settled the week more than 22 points or 0.43 per cent higher at 5,201.
The index gained more than 88 points while the market-cap surged by Tk 249 billion to Tk 6,897 billion in the past two weeks.
Falling inflation and declining Treasury yields spurred bargain hunters to take positions in lucrative shares amid expectations of a reversal of the market's prolonged bearish trend.
Some key financial indicators, including remittance and exports, have continued to show growth while inflation and the yield rates on government securities have shown a downward trend, bolstering investor confidence in the equity market.
The yields on Treasury bills (T-bills) dropped below 11 per cent in January, indicating a fall in deposit and lending rates in the near future.
"Usually, when the yield rate of the government securities falls, the equity market gets a boost," said Akramul Alam, head of research at Royal Capital, adding that if the T-bond rates came down to single digit, the market will rise further.
The blue-chip DS30 index, a group of 30 prominent companies, gained more than 6 points to 1,919 while the DSES index, which represents Shariah-based companies, rose 8 points to 1,156.
Price hike of selective large-cap stocks, such as Renata, Power Grid, BRAC Bank, Summit Power and Robi Axiata inspired the market rally as they jointly accounted for a 14-point rise in the key index.
However, junk stocks also continued to surge as half of the top 10 gainers were junk stocks, raising concerns about potential market manipulation.
Five junk stocks - New Line Clothing, Appollo Ispat, Nurani Dyeing, Ring Shine Textiles and Renwick Jajneswar featured in the weekly gainer list, soaring between 28.7 per cent and 12.8 per cent this week.
The non-performing stocks are significantly beating their industry peers in the past few weeks, which are in regular business operation, posting profits and giving dividends to their shareholders.
Turnover, a crucial indicator of the market, was Tk 21.07 billion this week, down from Tk 21.33 billion the previous week.
Consequently, the average daily turnover stood at Tk 4.21 billion, slightly down from Tk 4.26 billion the week before.
Investors were mostly active in the textile sector, which accounted for 16 per cent of the week's total turnover, followed by pharma (12 per cent) and banking (12 per cent) sectors.
Most of the major sectors posted gains. The power sector booked the highest gain of 2.33 per cent, followed by telecom, pharmaceuticals, engineering and food sectors.
On the other hand, the non-bank financial sector experienced the highest loss of 1.5 per cent, followed by the banking industry's 0.06 per cent.
Robi Axiata was the most-traded stock with shares worth Tk 573 million changing hands, followed by Midland Bank, Orion Infusion, Khan Brothers and Lovello Ice-Cream.
The Chittagong Stock Exchange (CSE) closed almost flat, with CSE All Share Price Index (CASPI) gaining 12 points to 14,529 while its Selective Categories Index (CSCX) shed 2 points to 8,802.
The port-city bourse traded 10.79 million shares and mutual fund units, with a turnover value of Tk 292 million.
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