The prime index climbed 3.77 per cent, the biggest single-day gain in more than 43 months, on the very first trading day after the end of Sheikh Hasina's regime on Tuesday, riding on renewed optimism.
Market analysts said spontaneous participation backed by hopes and excitement drove up the index. More and more investors took positions in blue chip stocks as political tension eased after Sheikh Hasina stepped down as prime minister on Monday.
Hasina, called an iron-fisted leader, served more than 15 years as PM before being forced to resign and flee the country on Monday. That was the climax of weeks-long student protests that snowballed into a mass movement against the Hasina-led regime.
Clashes between police and protesters led to around 400 deaths, including children. At the apogee of the movement, protesters asked Hasina to step down.
On Tuesday, the market opened with a flying colour and remained upbeat throughout the session, experiencing strong buying pressure from investors along with some fresh fund injections.
Substantial price surges of large-cap stocks, including blue chips, helped the benchmark index of the Dhaka Stock Exchange (DSE) gain more than 197 points or 3.77 per cent to 5,426.
It was the largest single-day gain of the DSEX since January 3, 2021, when DSEX jumped 216 points or 3.86 per cent.
The market rally was largely supported by fundamentally-strong stocks that had become cheap after sharp corrections in recent times.
BAT Bangladesh, Grameenphone, Square Pharmaceuticals, BRAC Bank, and Renata jointly accounted for more than 64-point rise of the index.
BAT Bangladesh soared 7.48 per cent, supporting nearly 16-point rise of the index alone, followed by Square Pharma driving 13.4-point rise of the index.
Other blue chip stocks, including multinational companies, such as Reckitt Benckiser, Unilever Consumer Care, Marico, Linde Bangladesh and Bata Shoe also witnessed price appreciation.
Subsequently, the blue-chip index DS30, a group of 30 prominent companies, surged more than 76 points to 1935 while the DSES index, which represents Shariah-based companies, rose 33 points to 1,176.
Stocks experienced a strong rebound owing to a sense of optimism regarding a positive shift of the market's momentum following the recent developments in the country's political landscape, said EBL Securities.
"Investors' confidence has got a boost as they hope for a vibrant capital market in near future," said Md Sajedul Islam, managing director of Shyamol Equity Management.
Investors are optimistic about the return of good governance in the market after the resignation of Sheikh Hasina, he added.
However, a leading merchant banker, requesting not to be named, said the economy was already in crisis and the recent political turmoil, which included Internet blackouts and supply chain disruptions, threatened improvement in the economic situation.
Recent events have taken a large toll on lives and economy, and unless effective measures are put in place, supply chain disruptions will cause further damage and add to public sufferings.
The private sector is the key driver of the economy and it requires substantial support to overcome the setbacks caused by the volatility.
The merchant banker urged the authorities concerned to take immediate steps to restore law and order in the capital and around the country. A stable political environment is needed for economic recovery and restoration of investors' confidence at home and abroad.
To bring back normality, social equity and justice need to be ensured.
"We will have to wait to see if the market gain is sustained," said the merchant banker.
Asif Khan, chairman of EDGE Asset Management, said the people wanted a change in the political regime.
"That's why the market exhibited a steady upward trend on Tuesday. The trend will continue if people become clear about the direction of the interim government [expected to be formed shortly].
However, Mr Khan added that "Whoever takes over the steering wheel of the country will face a big challenge".
Meanwhile, key protest organisers were having a meeting with President Mohammed Shahabuddin yesterday evening to talk about the formation of the new government.
"We can expect that investors' participation will increase if good governance is ensured by the interim government," Mr Khan said.
The market indices remained elevated right from the start of day's session as buyers remained predominant across the trading floor, causing most of the stocks to witness price appreciation.
Turnover climbed 261 per cent to one-month high of Tk 7.50 billion from the day before, as investors poured funds in large-cap stocks in anticipation of short-term gains.
All the large-cap sectors posted positive performance. Half of the sectors gained more than 5 per cent with telecom surging the most -- 9.1 per cent, followed by the non-bank financial institutions 9 per cent, ceramic 7 per cent, food 6 per cent and engineering 6 per cent.
Trust Bank, which soared 9.77 per cent, became the most traded stock with shares worth Tk 484 million changing hands, followed by Uttara Bank, Agni Systems, Techno Drug, and Square Pharma.
Acme Pesticides was the highest gainer, soaring 10 per cent, while Sonar Bangla Insurance was the top loser, shedding 3 per cent.
The Chittagong Stock Exchange also ended sharply higher, with its All Shares Price Index (CASPI) soaring 467 points to 15,393, while the Selective Categories Index (CSCX) jumped 284 points to 9,279.
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