Stocks extended the rally on Wednesday, with the benchmark index of the Dhaka Stock Exchange (DSEX) exceeding the 5,300 mark after a month, as buoyant investors put fresh bets on large-cap stocks.
Market experts said investors opted to take positions in beaten-down stocks as they had plunged to a historic low after the removal of floor price in January this year.
The indices stayed upbeat throughout the session with the benchmark index of the Dhaka Stock Exchange (DSE) rising 60 points or 1.16 per cent to settle at 5,303 on Wednesday.
Investors felt a boost to their confidence after the news that the International Monetary Fund (IMF) approved the third tranche of $4.7B loan to Bangladesh and that the opportunity of legalizing undisclosed money by paying a 15 per cent tax would stay in the final budget.
The $1.15 billion loan approval on Monday was a significant development for Bangladesh that has been grappling with dwindling foreign exchange reserves over the past two years.
The possibility that the proposed capital gains tax on individual investors will be modified in the final budget also encouraged a section of investors to inject money in stocks.
Market turnover crossed the Tk 6-billion mark after more than a month, rising by more than 15 per cent to Tk 6.10 billion from the day before.
Minhaz Mannan Emon, managing director at BLI Securities, said multinational companies and blue chip stocks had become cheap after sharp corrections in recent times, increasing investors' appetite for those.
"Multinational companies and blue chip stocks are gradually getting buyers, which indicates that institutional investors are active in the market, which is a good sign," said Mr Emon.
Substantial price hikes of large-cap stocks, including multinational companies, helped the market stay afloat for the second day.
Beximco Pharma, Robi, Grameenphone, BAT Bangladesh, and Beacon Pharma jointly accounted for more than one-third of Wednesday's index rise.
Beximco Pharma's stock climbed 5.3 per cent, supporting more than 8 points' rise of the index, while Robi stock jumped 9.9 per cent helping another 5 points' rise.
Other multinational companies such as Marico, Reckitt Benckiser and Bata Shoe also saw price appreciation.
When it comes to investing, institutional and foreign investors are mostly interested in blue chip stocks. These companies are well governed and have successfully maintained a profit growth even in adverse business environments.
According to EBL Securities, investors sought to grab the opportunity of availing tax rebates from secondary market investments, which also drove up market participation.
June 30 [Sunday] is the last day for investing in stocks for investors to enjoy tax benefits for FY24.
The DS30 index, a group of 30 prominent companies, surged more than 26 points to 1,903, while the DSES index, which represents Shariah-based companies, jumped 16 points to 1,166.
The large-cap sectors posted positive performance. Telecom booked the highest gain of 5 per cent, as the sector heavyweight GP soared 3.3 per cent alone, followed by engineering 4.6 per cent, cement 3 per cent, general insurance 2.8 per cent.
Pharmaceuticals, food and textile sectors accounted for more than half of the day's total turnover.
A majority of the stocks saw price surge, as out of the 404 issues traded, 251 closed higher, 89 lower and 64 remained unchanged on the DSE trading floor.
Unilever Consumer Care, which lost 0.82 per cent, became the most-traded stocks, with shares worth Tk 622 million changing hands, closely followed by Capitec Growth Fund, Alif Industries, Pearl Beach and Pragati Life Insurance.
The Chittagong Stock Exchange (CSE) also ended sharply higher with its All Share Price Index (CASPI) soaring 88 points to 14,925 and the Selective Categories Index (CSCX) rising 56 points to 8,985.
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