Distressed stocks surge as revival fund news fuels market rally 

Infographics: TBS

Bangladesh's stock market extended its winning streak today (3 June), with turnover reaching an eight-month high as investors rushed into distressed and underperforming stocks amid optimism over government support measures and expectations of regulatory reforms.

The rally was driven largely by the government's decision to create a Tk60,000 crore special fund aimed at reopening closed industrial units and supporting financially troubled enterprises. 

Investor sentiment was also boosted by discussions over the expected reconstitution of the Bangladesh Securities and Exchange Commission (BSEC), which many market participants believe could pave the way for reforms and help restore confidence in the capital market.

At the close of trading, the benchmark DSEX index of the Dhaka Stock Exchange (DSE) rose 35 points to settle at 5,442. The blue-chip DS30 index gained 7 points to 2,057, while the DSES Shariah Index advanced 10 points to 1,099.

Turnover on the premier bourse climbed to around Tk1,279 crore, the highest daily turnover in the past eight months. The figure was 18.43% higher than the previous trading session, reflecting a notable increase in trading activity and investor participation.

Market breadth remained firmly positive. Of the securities traded on the DSE, 243 advanced, 98 declined and 49 remained unchanged.

Investors said the newly announced government fund has raised expectations that several listed companies suffering from prolonged financial distress and operational disruptions may eventually be able to resume business activities. 

As a result, buying interest concentrated on stocks seen as potential beneficiaries of the initiative.

The optimism was particularly evident among distressed and low-priced shares, which dominated the day's gainers' list.

Regent Textile Mills and Prime Finance jumped 10% each, while Sonargaon Textiles gained 9.93%. Meghna Pet Industries rose 9.89%, Bangladesh Industrial Finance advanced 9.76%, Nurani Dyeing added 9.68%, New Line Clothings climbed 9.43%, and Emerald Oil Industries gained 9.18%.

In its daily market review, EBL Securities said the benchmark index reached a three-month high, extending its rally to eight consecutive trading sessions.

The brokerage noted that investor sentiment remained upbeat amid expectations of supportive policy measures for capital market development, encouraging investors to accumulate stocks viewed as attractively valued.
According to the brokerage, buying interest remained broad-based throughout the session, helping sustain the market's upward momentum despite some mild selling pressure.

Sector-wise, the engineering sector dominated trading, accounting for 17.1% of the day's turnover, followed by textiles at 13.4% and pharmaceuticals at 12.7%.

Most sectors ended in positive territory. The services sector led the gainers with a 3.7% rise, followed by paper and printing at 3.2% and financial institutions at 2.9%. The banking sector was the only laggard, declining 0.5%.
The positive sentiment was also reflected at the Chittagong Stock Exchange (CSE). The Selective Categories Index (CSCX) rose 55.9 points, while the All Share Price Index (CASPI) gained 104.8 points.

Analysts, however, cautioned investors against making investment decisions based solely on expectations.

They noted that the sharp gains in many distressed stocks remain largely driven by sentiment rather than fundamentals, and that the longer-term impact will depend on how effectively the government's revival fund is implemented and whether struggling companies can successfully restart operations.

Even so, the latest rally suggests confidence is gradually returning to the market after a prolonged period of weakness.