The prime index of the Dhaka Stock Exchange (DSEX) climbed a whopping 306 points on Thursday, the biggest single-day jump since the introduction of the new index in January 2013, as more and more investors joined the rally with high hopes.
DSEX, the core index of the Dhaka Stock Exchange, shot up to 5,925 as the country is expected to see a major overhaul of the national politics aimed at restoring democratic practices that had eroded over the last 15 years before the fall of Sheikh Hasina-led government on Monday.
Apart from yesterday, the index witnessed an unusual rise of 372 points or 10 per cent in March 2020 due to the imposition of floor price. All stocks jumped automatically on March 19, 2020 as the stock market regulator set a floor price for every stock by calculating the average of the closing prices of the preceding five trading days.
The price restriction was meant to stop stocks from falling below a certain level on the bourses. While the artificial price controlling mechanism did not reflect the market's behavior, Thursday's market showed investors optimism about the outcome of promised political reforms.
The DSEX added nearly 700 points in the past three days after the resignation of Sheikh Hasina as prime minister on Monday. At the same time, the market cap surged by Tk 485 billion.
Substantial price hikes of large-cap stocks, such as BAT Bangladesh, BRAC Bank, Square Pharma, Islami Bank, Grameenphone, and National Bank elevated the index. They made a significant impact on the index as these six stocks jointly accounted for almost a 100-point rise of the key index on Thursday.
BAT Bangladesh, which gained 8.7 per cent, supported a 21.5-point rise of the index alone, while BRAC Bank contributed 18.4 points to the index as it went up 9.8 per cent.
Square Pharma, the second largest listed firm in terms of market cap, was up 2.8 per cent on the bourses, contributing a 17-point rise of the key index.
Subsequently, the blue-chip index DS30, a group of 30 prominent companies, spiked more than 110 points to 2,132 while the DSES index, which represents Shariah-based companies, rose 55 points to 1,275.
"The prices of fundamentally-strong stocks are soaring, which is a good sign for the market as the recent changes in the country's political environment boosted investors' confidence," said Md Saiful Islam, president of the DSE Brokers' Association (DBA).
Investors are hopeful about the return of good governance in the market under the new interim government, said Mr Islam.
The 17-member new interim government, led by Chief Advisor Dr Muhammad Yunus, took oath on Thursday evening.
Md Shakil Rizvi, managing director of Shakil Rizvi Stock, said the market witnessed a steady upward trend riding on investors buying appetite in fundamentally-sound stocks.
The recent growth in turnover and index - the two most important indicators of the market in general - suggests that investors' confidence in the market is back.
"Continuous growth in turnover pushed the investors' confidence to a new level, and high trading volume suggested that institutional investors are largely active in the market," said Mr Rizvi.
According to EBL Securities, stock indices maintained an upward trajectory with increased market participation as investors see good investment opportunities.
Market turnover more than doubled to Tk 16.06 billion on Thursday from the day before. It was the highest single-day turnover in six months.
Pharmaceuticals, banking and food sectors jointly grabbed more than half of the day's total turnover.
All sectors posted significant gains with the heavyweight telecom sector securing the highest 9 per cent rise. The sector leader, Grameenphone surged 8.7 per cent alone.
The telecom sector was followed by non-bank financial institutions with a gain of 8 per cent, banking 8 per cent, food 7.5 per cent, power 7.2 per cent and ceramic 7 per cent.
Gainers took a strong lead over the losers, as out of 398 issues traded, 364 closed higher, 27 ended lower and 7 remained unchanged on the Dhaka bourse.
City Bank, which jumped 8 per cent, became the most traded stock with shares worth Tk 638 million changing hands, closely followed by BAT Bangladesh, Techno Drug, Square Pharma, and Sea Pearl beach Resorts.
Seven stocks witnessed the highest allowable single-day rise of 10 per cent with Beacon Pharma topping the list. Gemini Sea Food was the top loser, shedding 3 per cent.
The Chittagong Stock Exchange also ended sharply higher with its All Shares Price Index (CASPI) soaring 861 points to 16,799, while the Selective Categories Index (CSCX) jumped 522 points to 10,132.
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