Stocks rebounded on Wednesday after a one-day break, driven by bargain hunting in undervalued blue-chip shares as investor sentiment improved on hopes of positive market developments and easing Middle East tensions.
The rally was also driven by a combination of fiscal incentives, tax relief measures and regulatory reform initiatives aimed at deepening the capital market and attracting long-term investment, market analysts said.
Investor sentiment received an additional boost from improving global market confidence after the announcement of a ceasefire in the Middle East, prompting renewed buying appetite amid easing geopolitical concerns.
The United States and Iran had reached an agreement to end the war and reopen the Strait of Hormuz, sending a wave of relief through global financial markets and easing concerns over potential disruptions to energy supplies.
Oil prices are showing a downward trend, coming down to a three-month low of $78.24 a barrel on Wednesday as hopes rise for a return to stability in global energy markets before the signing of the agreement.
"Budgetary incentives and optimism surrounding the ceasefire agreement between the United States and Iran have strengthened investor confidence," said Md Sajedul Islam, a director of the Dhaka Stock Exchange (DSE).
"These developments have generated renewed optimism among investors and market participants," he said, noting that investor confidence is gradually returning, as reflected in daily turnover exceeding Tk 10 billion for the last few consecutive trading sessions.
He added that the market has maintained upward momentum in three of the four sessions since the national budget announcement, adding 101 points to the prime index.
The benchmark index of the Dhaka Stock Exchange (DSE) surged 16 points, or 0.28 per cent, to 5,621 after losing 35 points in the previous session.
A price surge of select blue-chip stocks such as Beximco Pharma, Square Pharma, Shepherd Industries, UCB and Walton contributed half of the index gain on Wednesday.
The DS30 index, comprising blue-chip companies, rose 3 points to 2,113, while the DSES index, which tracks Shariah-based stocks, rose 7 points to 1,136.
Expectations surrounding the newly formed securities commission's reform agenda also helped strengthen market sentiment, as investors anticipate greater transparency, fair pricing and stronger governance, said Mr Sajedul Islam.
According to EBL Securities, bargain hunters actively accumulated fundamentally strong stocks at attractive valuations, while positive expectations regarding market reforms and prospects for a favourable resolution to the Middle East conflict supported the recovery.
Market participation on the premier bourse remained robust, with total turnover standing at Tk 12.11 billion, a 2 per cent increase over the previous session, as buying interest spread across textile, engineering and pharmaceutical sector stocks.
Gainers outnumbered losers. Of the 394 issues traded on the DSE, 182 advanced, 158 declined and 54 remained unchanged.
Most of the large-cap sectors posted gains. Engineering posted the highest gain of 0.76 per cent, followed by telecom, pharma, banking, food and power.
Summit Alliance Port was the most-traded stock, with shares worth Tk 993 million changing hands, followed by Beximco Pharma, IPDC Finance, BBS Cables and BD Thai Aluminum.
The Chittagong Stock Exchange (CSE), however, ended mixed. Its All Share Price Index (CASPI) fell 22 points to 15,250, while the Selective Categories Index (CSCX) shed 17 points to 9,322.
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