After a challenging year, the stock market entered the New Year on high hopes, as bargain hunters placed fresh bets on lucrative stocks on Thursday amid renewed optimism.
Market analysts said investors' optimism over evolving political developments offered some relief to the broadly subdued market sentiment, with hopes for political stability and macroeconomic recovery after the parliamentary election.
Many investors left the market last year, frustrated by political uncertainty, while institutional investors were mostly inactive, leading to price erosion in many well-performing stocks.
Due to massive price erosion, most blue-chip stocks, including much-preferred multinationals, fell to their historical lows, which inspired investors to deploy fresh funds.
In a major development, Acting BNP Chairman Tarique Rahman returned home from London last week after 17 years in exile. As the leader of the largest political party, his return has had a very positive impact on the country's political landscape, analysts say.
Minhaz Mannan Emon, a director of the Dhaka Stock Exchange, said the return of Tarique Rahman has already reduced political tension and improved public confidence in businesses as well as financial markets.
"As the uncertainties surrounding the elections have been cleared, along with policy certainty on the regulatory front, the market is expected to attract fresh investment," said Mr Islam.
The market opened on a positive note and maintained an upbeat trajectory throughout the session, owing to a dominant buying trend, as market participants expected prevailing market uncertainties to have somewhat eased.
"The broad-based price appreciation emerged across most listed securities, with opportunistic investors repositioning into fundamentally strong stocks perceived to be undervalued amid anticipation of improved clarity on the political front," said EBL Securities.
The stockbroker also predicted that liquidity conditions would improve, as the central bank is likely to aim at easing monetary policy by reducing interest rates.
"That should accelerate private-sector credit growth, reinvigorate subdued capital investment, improve company profitability, and restore overall business confidence," said EBL Securities.
The economy already showed signs of recovery as gross foreign exchange reserves crossed $33 billion for the first time in three years on Thursday. Remittances remained buoyant, while exports slowed and imports rose slightly.
Subsequently, the benchmark index of the Dhaka Stock Exchange (DSE) went up more than 45 points, or 0.93 per cent, to 4,910, after losing 6.7 per cent last year.
The DS30 index, a group of 30 prominent companies, gained 16 points to 1,869, while the DSES index, which represents Shariah-based companies, rose five points to 1,006.
The price surge in heavyweight banking stocks such as BRAC Bank, Pubali Bank, Eastern Bank, Islami Bank, and Uttara Bank largely contributed to the market index rise. These five stocks accounted for one-third of the gain in the DSEX.
However, investor participation has yet to rebound, as most investors remain watchful of the market's momentum, although turnover increased slightly by 4 per cent to Tk 3.68 billion compared to the previous session.
Investors were mostly active in the textile sector, which accounted for 18 per cent of the day's total turnover, followed by the banking and pharmaceutical sectors.
Gainers outnumbered losers, as out of 391 issues traded, 263 saw price jumps, while 66 declined and 62 remained unchanged on the DSE floor.
Most large-cap sectors posted positive performance. Non-bank financial institutions booked the highest gain of 2.07 per cent, followed by banking, power, pharmaceuticals, food, engineering, and telecommunications.
Orion Infusion became the most-traded stock, with shares worth Tk 160 million changing hands, closely followed by Uttara Bank, Simtex Industries, Sonali Paper, and City Bank.
The Chittagong Stock Exchange also closed higher, with its All Shares Price Index (CASPI) gaining 81 points to 13,692, while the Selective Categories Index (CSCX) rose 47 points to 8,440.
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