The benchmark index of the Dhaka Stock Exchange (DSE) surpassed the 5,600-point threshold once again after six months as investors showed buying appetite in bank stocks amid improved post-election sentiment.
Market analysts cited the ongoing market recovery as being driven by broad-based investor participation due to post-election political stability and macroeconomic recovery.
Md Sajedul Islam, a DSE director, said investors are anticipating major changes in the top positions at the securities regulator, which may boost their confidence.
Investors think the current chief of the Bangladesh Securities and Exchange Commission (BSEC) has failed to restore investor confidence and bring back market discipline.
Finance Minister Amir Khosru Mahmud Chowdhury has already hinted that changes are inevitable as a new government has come to power.
Meanwhile, the government appointed Md Mostaqur Rahman, a businessman-cum-politician, as Bangladesh Bank Governor, for the first time in the country's history.
The stock market in the near term is expected to react positively to the "business-first" appointment, said BRAC EPL Stock Brokerage in an analysis.
Mr Rahman's prior association with the CSE suggests he may be more inclined to support capital market development and liquidity conditions, it said.
"We may also expect a push to move large corporate debt away from bank balance sheets and into the debt market, a move consistent with his background in capital management."
Such a shift would be consistent with efforts to ease banking sector concentration risk while strengthening capital market intermediation, said BRAC EPL.
However, Transparency International Bangladesh (TIB) has expressed concern over the independence and impartiality of the newly appointed central bank governor, questioning whether he will be able to carry out his responsibilities free from corporate and political influence.
Despite criticism from different quarters about his appointment, the banking sector largely spurred the market gain on Thursday as 27 listed banks out of 36 saw their prices increase.
The banking sector also accounted for 22 percent of Thursday's total market turnover, with the sector gaining 1.2 per cent.
Many investors think banks' earnings will increase due to post-election political and macroeconomic stability, said Mr Islam, who is also the managing director of Shyamol Equity Management.
Moreover, investors perceived the central bank's latest relaxation of loan rescheduling rules as a favourable measure for the sector.
The market opened on a firm note on Thursday, building on the prior day's late-session buying momentum, which led to price appreciation across most stocks as the session progressed.
Although mid-session profit-taking briefly moderated early gains, renewed buying interest in the latter half of the session enabled the index to recoup earlier declines and settle higher by the close.
DSEX, the prime index of the DSE, finally rose 45 points, or 0.82 per cent, to settle at 5,600.26.
The blue-chip DS30 index, a group of 30 prominent companies, also gained 17 points to 2,169, while the DSES index, which represents Shariah-based companies, rose 10 points to 1,116.
The price gains of selective blue-chip stocks such as Islami Bank, Beximco Pharma, City Bank, Eastern Bank and Robi Axiata largely contributed to the market surge. These five stocks accounted for half of Thursday's index rise.
Islami Bank alone added nearly 10 points to the prime index as the bank's stock jumped 3.6 per cent on Thursday.
Market participation remained buoyant, as total market turnover stood at Tk 9.47 billion, which was 68 per cent higher than the previous day's turnover.
Gainers strongly outnumbered losers on the DSE floor. Of the 391 issues traded, 239 closed higher and 93 ended lower, while 59 remained unchanged.
Major sectors posted positive performances. The non-bank financial institutions' sector posted the highest gain, followed by banking, pharma, power, telecom and engineering.
City Bank became the most-traded stock, with shares worth Tk 524 million changing hands, closely followed by Robi, Orion Infusion, Khan Brothers and BRAC Bank.
The Chittagong Stock Exchange also ended higher, with its All Shares Price Index (CASPI) rising 128 points to 15,597, while the Selective Categories Index (CSCX) surged 9 points to 9,587.
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