DSEX hits 10-month high as US tariff cut spurs market rally

The Dhaka Stock Exchange (DSE) surged to a 10-month high today (3 August) as the benchmark index, DSEX, climbed 92 points or 1.70% to close at 5,536  – its highest level since 1 October 2024, when it stood at 5,586 points.

The rally was largely driven by renewed investor optimism following the United States' decision to reduce its reciprocal tariff on Bangladeshi goods imports from 35% to 20%. This move is expected to ease pressure on Bangladesh's export sector – particularly the garment industry – and boost manufacturing performance.

Market analysts noted that investor sentiment was buoyed not only by the tariff relief but also by continued strength in the banking and manufacturing sectors, which together helped drive the market's upward momentum.

The blue-chip index DS30 also posted gains, rising by 36 points to settle at 2,150, reflecting strong performances from large-cap stocks.

Market turnover saw a notable rise, climbing by 7% from the previous session to reach Tk1,137 crore – the highest in 11 months – indicating increased investor participation. The previous highest turnover was recorded at Tk1,243 crore on 14 August.

Out of the traded issues on the DSE, 218 advanced, while 122 declined and 58 remained unchanged.

EBL Securities, in its daily market review, said the upward momentum in the capital bourse remains resilient, buoyed by robust market participation, largely driven by renewed investor optimism following favourable developments in Bangladesh's US tariff negotiations.

The bullish wave swept across the trading floor as investors continued chasing for the current rallies owing to positive expectations, driving price appreciations in the majority of scrips, it added.

Meanwhile, yesterday's gain extended the market's rally to three consecutive sessions, during which the prime index DSEX jumped 238 points. The market capitalisation also witnessed a significant surge, rising by Tk11,000 crore to reach Tk7.17 lakh crore.

Ashequr Rahman, managing director of Midway Securities, told TBS that the recent market rally began following the joint statement issued after a meeting between the Chief Adviser and BNP's Acting Chairman Tarique Rahman.

"After that political development, investors and businesses began to see hope that the uncertainty surrounding the upcoming election might ease. That shift in sentiment helped spark the rise in the stock index," he said.

However, he noted that while the index initially climbed, market participation did not increase significantly. "Over the last few days, we've seen a rise in participation, which pushed daily turnover above Tk1,000 crore – a very positive sign for the market."

Rahman pointed out that the market had been undervalued for a prolonged period, especially blue-chip stocks. "In previous rallies, junk stocks were driving the surge. But this time, it's different — blue-chip companies are playing a major role in the uptrend."

He also highlighted the recent momentum in banking stocks. "Bank shares had long been overlooked and are currently trading at very low valuations. Their price-to-earnings ratios indicate strong potential. Investors are gaining confidence in the sector, particularly due to Bangladesh Bank's efforts to restore discipline in banking."

Regarding the external front, he added, "The uncertainty surrounding the US reciprocal tariff issue has largely eased, which also had a positive spillover effect on the capital market."

He further said that Bangladesh Bank's timely measures have contributed to a more stable forex market, while inflation is gradually coming down to a manageable level.

"Given these developments, both institutional and foreign investors are growing more optimistic about the future of the economy. That's why their participation has increased. We believe this is a sustainable rally," Rahman said.

On the sectoral front, bank issues exerted the highest turnover, contributing 26.5% to the DSE's total turnover, followed by textile and textile sectors.

Among the most actively traded stocks during the session were Uttara Bank, Bangladesh Shipping Corporation, and City Bank. 

Sectors mostly displayed positive returns, out of which fuel and power, ceramic and IT exhibited the most positive returns on the bourse, while only general insurance exerted marginal corrections.

Standard Bank topped the gainers' list, while SEML Lecture Mutual Fund was the day's worst performer.