Dhaka stocks break election-driven rally

The indices of the Dhaka Stock Exchange snapped their election-driven rally today (16 February), ending a three-session winning streak, as cautious investors moved to lock in profits and shifted funds to lucrative, undervalued, and promising stocks on the trading floor. 

The benchmark DSEX went down 11 points to close at 5,590. The blue-chip DS30 index decreased 9 points to settle at 2,136, while the Shariah-based DSES shed 9 points to end at 1,119.

Market turnover decreased 0.39% to Tk1,270 crore, down from Tk1,275 crore in the previous session. Of the 397 issues traded, 153 advanced, 218 declined, and 26 remained unchanged.

According to market insiders, the stock market began to climb a few days ahead of the election, with the upward trend continuing for three consecutive trading sessions. Many investors took positions in anticipation of greater political stability after the election.

However, as several formalities related to the formation of the new government are still pending, cautious investors chose to book profits yesterday after the recent rally. Following several days of gains, they locked in returns and moved to a more defensive stance. At the same time, there was visible activity in switching funds into undervalued, fundamentally strong, and promising companies.

Prior to the election, the market had been under pressure for an extended period due to multiple uncertainties. Over the past year, prolonged political uncertainty and several regulatory decisions that failed to restore investor confidence contributed to a sustained downturn. Many retail investors exited the market, while institutional and high-net-worth investors largely remained inactive. As a result, share prices of even fundamentally sound companies declined significantly.

Market analysts say political uncertainty was the primary driver of investor sentiment during this period. Because of that uncertainty, large investors were reluctant to take risks, which kept overall trading volumes subdued and reduced market depth.

Now that the election has been completed and a new political government is set to assume responsibility, analysts believe the situation could gradually improve. If policy stability is ensured and consistency in decision-making is maintained, investor confidence is likely to return. That, in turn, could encourage greater participation from large investors, increase trading volumes, and pave the way for a stronger recovery in the capital market. 

According to analysts, a stable political environment would also create a more favorable climate for business and investment, ultimately supporting further growth in the stock market.

The Telecommunication sector posted the highest loss, declining by 1.56%, followed by Engineering at 0.81%, Food and Allied at 0.77%, Fuel and Power at 0.35%, Bank at 0.31%, and NBFI at 0.10%. In contrast, the Pharmaceutical sector edged up by 0.13%. Block trades accounted for 2.6% of the total market turnover. 

The Chittagong Stock Exchange closed on a mixed note. The CSCX index fell 14 points to 9,541, while the CASPI index rose 6 points to finish at 15,526, reflecting mixed sentiment across the market.