Weekly Review: Stocks rebound as regulatory measures lift sentiment

Bangladesh's stock market saw a resurgence this week as investor confidence was buoyed by robust corporate earnings and positive regulatory interventions aimed at stabilising the market.

The benchmark index managed to recover from a prolonged bearish phase, spurred by improved earnings, dividend announcements, and supportive discussions around liquidity measures.

The market began the week in a cautious mode, with prevailing bearish sentiment driving the benchmark index below the key 5,000-point mark.

However, as earnings and dividend declarations surpassed investor expectations, and with ongoing discussions around liquidity support from the Investment Corporation of Bangladesh (ICB) alongside potential reductions in capital gains tax, confidence quickly rebounded.

The DSEX, the primary index of the Dhaka Stock Exchange, rose by 84.81 points or 1.7%, settling at 5,199 points. Investor activity grew by 23%, with turnover reaching Tk416.7 crore, compared to Tk338.7 crore in the previous week. Banking, pharmaceuticals, and textiles emerged as the top sectors, representing 19.2%, 16.6%, and 10.8% of market activity, respectively. Notably, the Mutual Fund sector registered the highest gains with a 10.1% rise, while the banking sector was the only one to post minor losses at 0.5%.

In parallel, the DS30 index, representing 30 major companies, climbed 47 points to close at 1,926. Meanwhile, the DSES index, which tracks Shariah-compliant stocks, saw a slight decline of 0.89 points, ending at 1,145.

Market turnover, a critical indicator of investor participation, rose to Tk2,883 crore over the week, a significant increase from the Tk1,693 crore recorded the previous week.

The daily turnover average reached Tk416 crore, a 23% rise from last week's average of Tk338 crore.

Recent regulatory efforts, including the formation of an investigative panel to analyse the causes behind the recent market downturn, were instrumental in helping to restore investor trust. Additionally, a meeting between Dr Salehuddin Ahmed, the Finance and Commerce Adviser, and the Bangladesh Securities and Exchange Commission (BSEC) has brought assurances of short-, medium-, and long-term measures to address market volatility.

The market rebound was largely driven by the recovery of fundamentally strong stocks, which had reached attractive valuations following recent corrections. Regulatory steps are anticipated to further stabilise the market, as reflected in the gains of a significant portion of listed companies.