The stock market rebounded sharply on Tuesday as optimism over possible changes to the margin lending rules drew investors back to equities after a recent bout of profit-taking.
Market analysts said optimism that the Bangladesh Securities and Exchange Commission (BSEC) would adopt investor-friendly revisions to the draft margin financing rules revived buying interest following the market's recent correction.
Insurance stocks, which had come under heavy selling pressure over the previous two sessions, staged a strong recovery as investors anticipated a possible relaxation of the proposed margin eligibility criteria. Shares in non-bank financial institutions (NBFIs) also attracted fresh buying on expectations of short-term gains.
The securities regulator on Sunday published the draft amendment to the Margin Rules, 2025, inviting comments, suggestions and objections from stakeholders within two weeks.
Investor sentiment had weakened after the draft proposed tighter margin lending provisions for insurance companies. Insurance stocks lost nearly 6 per cent over the previous two sessions before recovering 1 per cent on Tuesday.
Under the proposed rules, the margin loan ratio for life insurance companies would be capped at 1:0.25, compared with 1:1 for other companies. The draft also proposed stricter price-to-book (P/B) criteria for margin eligibility.
While banks and non-bank financial institutions would remain eligible for margin facilities up to three times their P/B ratio, insurance companies would face a maximum P/B limit of one, raising concerns among investors.
The regulator, however, clarified on Monday that the proposed amendment was not final and would be finalised only after reviewing feedback from stakeholders.
The BSEC said the draft was aimed at making margin rules simpler, practical, investor-friendly and effective while ensuring investor protection and market stability.
"The final amendment will be prepared after considering stakeholder feedback and will be designed to support the overall development and stability of the capital market," the commission said.
Market indices maintained a firm upward trajectory from the opening bell on Tuesday, as sustained buying interest and strengthening investor participation drove broad-based price appreciation across most stocks.
The benchmark DSEX index of the Dhaka Stock Exchange (DSE) gained 41 points, or 0.71 per cent, to close at 5,899 points, recovering from the previous session's decline.
According to EBL Securities, the market rebounded as optimism over favourable revisions to the proposed margin rules revived investor confidence and encouraged broad-based accumulation.
Meanwhile, insurance sector shares stabilized following consecutive sessions of heavy selling amid expectations of potential regulatory easing on their marginable criteria, said the stockbroker.
The DS30 Index, which tracks blue-chip stocks, also gained 11 points to 2,220, while the DSES Index, comprising Shariah-compliant companies, rose 7 points to 1,204.
Price surge of IDLC Finance, Southeast Bank, BAT Bangladesh, LankaBangla Finance and City Bank together accounted for nearly 10 points of the DSEX's rise.
Turnover on the prime bourse jumped nearly 17 per cent to Tk 11.3 billion from Tk 9.7 billion in the previous session, indicating stronger participation from investors.
The textile sector dominated trading, accounting for 18.4 per cent of the day's total turnover, followed by pharmaceuticals (11.8 per cent) and banking (11.2 per cent).
Market breadth remained firmly positive, with 291 issues advancing, 56 declining, and 49 remaining unchanged out of 396 traded securities.
Queen South Textile topped the turnover chart with shares worth Tk 252 million changing hands, followed by Malek Spinning Mills, LankaBangla Finance, IPDC Finance and Dragon Sweater.
Sector-wise, mutual funds posted the highest gain, rising 4.5 per cent, followed by financial institutions (3.6 per cent) and tannery stocks (2.4 per cent). Only the services and pharmaceuticals sectors ended marginally lower, declining 0.5 per cent and 0.1 per cent, respectively.
Among the day's performers, National Polymer emerged as the top gainer, advancing 9.94 per cent, while Islami Insurance suffered the steepest decline, falling 3.82 per cent.
The Chittagong Stock Exchange (CSE) also ended higher. Its All Share Price Index (CASPI) rose 60 points to close at 15,798 while Selective Categories Index (CSCX) gained 37 points to close at 9,652.
babulfexpress@gmail.com
