Investor optimism on elections lifts oversold shares, market edges up
Market analysts say clearer political direction and supportive policy signals could play a key role in restoring stronger investor confidence in the weeks ahead
The capital market showed signs of recovery last week, shaking off the pessimism that dominated earlier sessions, as bargain hunters moved in on oversold stocks. Investor expectations of greater clarity surrounding the upcoming national election helped revive selective buying interest, lending support to the market.
Despite the rebound, trading remained volatile throughout the week. Risk-averse investors continued to trim equity exposure amid shifting political signals and the absence of strong market-moving catalysts, keeping overall confidence fragile.
Nevertheless, selective accumulation by optimistic investors in beaten-down scrips provided enough momentum for the broad market index to close the week slightly higher. Market analysts say clearer political direction and supportive policy signals could play a key role in restoring stronger investor confidence in the weeks ahead.
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By the end of the week, the benchmark index DSEX gained 52 points to close at 4,884. The blue-chip DS30 rose 23 points to 1,883, while the Shariah-based DSES advanced 8 points to 1,009. However, The DSE SME Index (DSMEX) shed 8 points to close at 851.
Market insiders said the market is currently going through a prolonged negative trend, which has led to significant price erosion across many stocks. As a result, shares of several fundamentally strong companies have become undervalued, creating attractive entry points for long-term investors.
In this environment, cautious investors are gradually shifting their investments toward these fundamentally sound but beaten-down stocks, hoping to benefit from a potential turnaround.
They also noted that following the announcement of the election schedule, positive political activities and conciliatory signals from major political parties have had a reassuring effect on investor sentiment. This improving political outlook is beginning to ease uncertainty, which could help restore confidence in the capital market. If this momentum continues, market participants believe a more positive vibe may emerge in the capital market in the coming days.
According to market analysts, political uncertainty remains the most crucial issue influencing the stock market. As this uncertainty gradually eases, the market is expected to move in a more positive direction. Due to the current uncertainty, institutional investors and large individual investors have largely stayed away from active participation, keeping trading volume below its potential level.
In its weekly market review, EBL Securities noted that the capital bourse regained its recovery momentum following last week's pessimism, as bargain hunters seized opportunities in oversold scrips amid investor anticipation of perceived clarity surrounding the upcoming national election.
Although the market witnessed some volatility as risk averse investors opted to pare exposure to equity investments since shifting political cues and the absence of meaningful catalysts kept investor confidence mostly subdued, selective accumulation by optimistic investors across beaten-down scrips allowed the broad index to close the week with a modest recovery despite lingering cautious market sentiment, according to the commentary.
Investors were most active in the Textile sector, which accounted for 17.9% of trading activity, followed by the Food sector at 11.7% and the Engineering sector at 10.7%.
Most sectors recorded positive returns during the period. The Services sector was the top performer, gaining 4.3%, while the Ceramic sector was the only major loser, declining by 0.8%.
