The benchmark index of the Dhaka Stock Exchange (DSE) climbed to a nearly two-year high on Sunday as investors responded positively to market-friendly fiscal measures in the final national budget and a series of regulatory reforms initiated by the securities regulator.
Market operators said the latest upbeat trend reflects a gradual return of investor confidence after a prolonged period of subdued trading, underpinned by improving macroeconomic indicators, political stability, stronger foreign exchange reserves and the government's renewed commitment to developing the country's capital market.
The DSEX, the benchmark index of the DSE, surged more than 43 points, or 0.76 per cent, to close at 5,787. This is the highest level of the index since September 2024.
Akramul Alam, head of research at Royal Capital, said the combination of supportive fiscal policies and regulatory reforms has created a more favourable investment climate, encouraging investors to gradually increase their exposure to equities.
"The market remained undervalued for a long time, so investors are gradually regaining confidence to invest in stocks," Mr Alam told the FE over the phone.
According to him, investor sentiment received a major boost following the appointment of renowned chartered accountant Masud Khan as chairman of the Bangladesh Securities and Exchange Commission (BSEC) in early June.
"The new BSEC leadership has sent a strong signal that restoring discipline, transparency and investor confidence is now a top priority," said Mr Alam.
The new commission has already introduced several market-friendly reforms aimed at restoring investor confidence and improving market efficiency. These include the withdrawal of floor prices on shares of Beximco and Islami Bank, restoring the stock exchanges' authority to determine circuit breakers and trading rules, and strengthening market surveillance to improve transparency and discipline.
"The regulator's reform initiatives have created positive expectations among investors, who believe the market is moving towards a more transparent and efficient environment," Mr Alam added.
After assuming office, the BSEC chief also announced plans to conduct a comprehensive review of existing securities regulations, IPO approval procedures and reporting requirements to make the regulatory framework more efficient and business-friendly.
If the reform momentum continues alongside further improvements in macroeconomic stability, the stock market could sustain its recovery in the coming months despite lingering challenges from tight monetary conditions and relatively high interest rates, Mr Alam said.
Investor confidence received a further boost from several capital market-friendly measures incorporated into the approved Finance Bill 2026. The fiscal measures include a lower tax on dividend income, removal of investment ceilings for claiming tax rebates on investments in mutual funds, and the continuation of tax exemptions on income earned from zero-coupon bonds for individual investors.
"These initiatives are expected to encourage greater participation from both retail and institutional investors while improving the attractiveness of equity investments relative to other financial assets," said Mr Alam.
Investors increased their exposure mostly to blue chip stocks as 25 out of 30 blue chips saw their prices rise on Sunday. Subsequently, the DS30 Index, comprising blue-chip companies, advanced 29 points to 2,191.
Valuations remain attractive, with many blue-chip stocks trading at substantial discounts to their historical averages, offering compelling opportunities for long-term investors, said Mr Alam.
Among blue chip stocks, Beximco Pharma, Unique Hotel & Resorts, Beacon Pharma, Bangladesh Shipping Corporation and IDLC Finance jointly contributed 16 points to Sunday's gain in the benchmark index.
Global developments also supported investor sentiment. Brent crude oil prices traded near $72 per barrel on Sunday, down from recent peaks of more than $120 a barrel, raising hopes of greater stability in international energy markets.
Market participation remained robust, with total turnover on the DSE reaching Tk 15.30 billion, a 6 per cent increase over the previous day.
The textile sector accounted for the largest share of daily turnover at 17 per cent, followed by general insurance (12 per cent) and engineering (11 per cent).
Market breadth remained firmly positive. Of the issues traded, 177 advanced, 153 declined, and 59 remained unchanged, reflecting broad-based buying interest.
All major sectors posted gains. The non-bank financial institutions sector recorded the highest gain of 2 per cent, followed by power, engineering, pharmaceuticals, food and banking.
Malek Spinning emerged as the day's most-traded stock, with shares worth Tk 534 million changing hands. It was followed by Beximco Pharma, IPDC Finance, and Bangladesh Shipping Corporation.
The Chittagong Stock Exchange (CSE) also ended higher. Its All Share Price Index (CASPI) rose 8 points to 15,416, while the Selective Categories Index (CSCX) gained 9 points to 9,446.
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