DSE index crosses 5,600 mark as post-budget optimism lifts market sentiment

The benchmark index of the Dhaka Stock Exchange climbed above the 5,600-point mark for the first time in more than nine months today (14 June), as investors responded positively to the post-budget policy environment and expectations of stronger economic conditions.

The DSEX gained 105 points, or 1.9%, to close at 5,625. The blue-chip DS30 index rose 47 points to 2,120, while the Shariah-based DSES advanced 14 points to 1,129.

Market turnover increased by 9.6% from the previous session to Tk1,358 crore. Of the issues traded, 246 advanced, 96 declined and 50 remained unchanged, reflecting broad-based buying interest across the market.

Analysts said investors welcomed a range of policy measures outlined in the budget, including support for private-sector growth, liquidity-enhancing initiatives and expectations of improving global economic conditions.

Demand strengthened across several major sectors, including banking, financial institutions, manufacturing and engineering, while rising turnover pointed to stronger participation from both institutional and retail investors.

However, market participants cautioned that sustaining the rally would depend on the effective implementation of policy measures, improved liquidity and continued structural reforms.

Akramul Alam, head of research at brokerage firm Royal Capital Ltd, said several positive factors contributed to the strong performance of the stock market on the day.

He said that although the budget did not offer direct incentives to investors, changes in taxation and measures viewed as unfavourable by dividend-focused investors had prompted a shift in investment strategies.

"As a result, many investors are reallocating their portfolios away from dividend-yielding stocks towards sectors with higher capital gain potential," he said, adding that this had increased buying pressure, particularly in banking, financial institutions and engineering stocks.

He also said the government's Tk60,000 crore rescue package for closed factories was expected to improve short-term liquidity in the market. "This injection is likely to increase the velocity of money, creating a more active trading environment and supporting overall market momentum," he said.

According to Akramul, plans to gradually shorten the settlement cycle from T+2 to T+0 have also strengthened investor confidence, as faster settlement is expected to attract more active traders and improve participation over time.

On the international front, he said easing tensions involving Iran and lower crude oil prices were positive developments for the global economy.

"If oil prices stabilise at normal levels, it would help control inflation in Bangladesh and ensure a more stable energy supply," he said.

Akramul added that buyers had outnumbered sellers for several weeks, indicating sustained accumulation and strong market momentum.

He also noted that the Tk2,500 crore liquidity support provided to Islami Bank had boosted the bank's share price, contributing to the rise in the benchmark index.

DSE Brokers Association President Saiful Islam said the health of the market should not be measured solely by movements in the index.

"The true strength of the stock market should not be judged only by the rise in the index, but by the level of investor confidence in the market," he said.

He said sustainable growth would depend on restoring and maintaining investor trust. If coordinated efforts by policymakers, regulators and market stakeholders continue, both turnover and the benchmark index could grow in a more stable and consistent manner.

Saiful also said several external economic indicators were turning favourable for Bangladesh, helping improve sentiment in the capital market.

He expressed hope that the domestic economy would strengthen gradually as broader macroeconomic conditions improved.

"If the underlying economic fundamentals continue to recover, the stock market will also benefit through higher participation, improved liquidity flow and reduced volatility," he said.

"Over time, this would help the market move towards greater stability and more balanced growth in both trading activity and index performance," he added.

In its daily market review, EBL Securities said the benchmark index of the capital bourse surpassed the 5,600-mark as favourable fiscal policy measures aimed at reviving private-sector growth and incentives for long-term capital market development bolstered investor confidence and fueled broad-based accumulation across the market.

The brokerage said the market remained firmly positive from the opening bell, with optimism driving sustained buying interest throughout the session and lifting share prices across most sectors.

General insurance stocks accounted for the largest share of turnover, contributing 15.4% of total market activity. The pharmaceutical and banking sectors followed, each accounting for 11.9%.

Most sectors finished higher. Financial institutions led the gains with a 4.4% rise, followed by banking stocks, which gained 3.3%, and information technology shares, which advanced 3.2%. The miscellaneous sector was the only major loser, declining by 3.5%.

Meanwhile, the rally extended beyond Dhaka, with the Chittagong Stock Exchange also ending higher. The Selective Categories' Index (CSCX) rose 91.1 points, while the All Share Price Index (CASPI) gained 147.6 points, reflecting broad-based optimism across the country's two stock exchanges.