Dhaka stocks extend gains for third day amid cautious optimism

Infographic: TBS

The Dhaka Stock Exchange (DSE) secured its third consecutive session of gains today (5 October), driven by active trading from cautious investors anticipating a post-correction market rebound.

The benchmark DSEX index rose by 32 points to close at 5,448, while the blue-chip DS30 index advanced 11 points to finish at 2,093. The shariah index edged up by 2 points, closing at 1,174.

However, market turnover declined by 11.19% to Tk619 crore, compared to Tk697 crore in the previous session. Out of 395 issues traded, 183 advanced, 147 declined, and 65 remained unchanged.

Market insiders noted that although the interim government has outlined a roadmap for the upcoming national election, investors remain cautious. The election period is expected to influence both the capital market and the broader economy, leading many to adopt a "wait-and-see" stance before committing to fresh investments.

Experts believe the market will gradually recover as government bill and bond rates continue to fall. Once the election schedule is announced, large investors currently on the sidelines are expected to return to the market. Moreover, the increasing pace of deposit mobilisation by banks could help inject further liquidity.

The capital market regulator has been implementing several reforms, with some already showing positive outcomes. Analysts said declining yields on government securities are supporting equities, as lower bond returns make stocks more attractive – especially with average market returns now above 10%.

An analyst, requesting anonymity, shared his thought with TBS. The market may strengthen further with falling Treasury bill and bond rates, while upcoming dividend announcements and company disclosures could also drive renewed interest in fundamentally strong stocks.

Investor confidence has improved amid signs of macroeconomic stability. Foreign exchange reserves have begun to rise, the government's plan to merge weaker banks has boosted sentiment, and political uncertainty ahead of the polls has eased somewhat.

In its daily market commentary, EBL Securities observed that the benchmark index edged higher as investors returned with heightened buying appetite following a four-day public holiday. Positive developments on key macroeconomic fronts and optimism over the government meeting most IMF loan conditions for the upcoming tranche also strengthened investor sentiment. Improved forex liquidity in August, which stabilised the exchange rate, further eased macroeconomic concerns and encouraged broad-based participation across major scrips, the commentary added.

On the sectoral front, textile stocks accounted for the highest turnover at 12.4%, followed by banks (11.4%) and pharmaceuticals (9.9%). Most sectors posted positive returns, led by general insurance (3.7%) and paper (1.4%).

Meanwhile, the port city bourse – Chittagong Stock Exchange (CSE) – also ended in the green, as the Selective Categories Index (CSCX) gained by 58.3 points and the All Share Price Index (CASPI) advanced by 99.2 points.