Equities continue their upward trajectory, bolstering faith among investors
The Dhaka Stock Exchange (DSE) has been on a bullish run for eight consecutive sessions, with the benchmark index DSEX showing strong upward momentum. Over the past week, the index increased significantly, rising over 260 points (5.06%) to reach its highest level in about 10 months at 5,392 points.
This bullish streak is underpinned by robust investor optimism grounded in solid macroeconomic fundamentals, strong earnings expectations, and sectoral leadership by financial and pharmaceutical stocks. The rally is also driven by renewed appetite for large-cap stocks, improved sentiment regarding the macroeconomic outlook, and a favorable shift in investment preferences away from fixed income toward equities.
Key sectors driving gains include banks, pharmaceuticals, food, travel and leisure, paper, and printing, while some sectors like telecommunications, miscellaneous, and cement experienced declines or lower market cap. The bullish trend is further supported by declining yields on government fixed-income securities, which are prompting a shift in liquidity toward equities.
Investor participation has rebounded strongly, with increasing turnover reflecting renewed buying interest. For example, one session saw turnover increase 3% to Tk 479.52 crore, with 277 advancing stocks outnumbering declining ones substantially. Liquidity is gradually improving, and institutional participation is picking up, particularly in bank and telecom stocks.
The DS30 index, which focuses on blue-chip stocks, rose by 3 points to 2,090. However, daily turnover in the final trading session of the week dropped by 3.4% to Tk952 crore. Despite this minor decrease, investors' renewed confidence is evident in the rising turnover - from Tk300 crore to over Tk900 crore - in the Dhaka stock market.
The DSEX index is experiencing a strong rebound, supported by easing political uncertainty, improving macroeconomic indicators, and declining government bond yields. The government's decision to merge weak banks has further boosted market sentiment in the Dhaka stock market. The rally was also driven by growing clarity surrounding the upcoming national election and signs of improvement in the overall political and economic environment.
Experts emphasise the need for proper market reforms in the Dhaka stock market to maintain momentum and ensure a balanced, sustainable recovery. They also highlight the importance of an increased supply of quality shares in the market to support the ongoing bullish trend.
In conclusion, the DSE's recent bullish streak is a positive sign for the Bangladeshi economy. As long as macroeconomic conditions remain favorable, strong earnings expectations persist, and investor confidence remains high, the Dhaka stock market is expected to continue its upward trajectory. However, it is crucial for market reforms to be implemented to maintain this momentum and ensure a balanced, sustainable recovery.
- Investors are moving their funds from fixed income to equities, particularly in the finance and pharmaceutical sectors, as part of the ongoing bullish trend in the Dhaka Stock Exchange (DSE).
- The strong investor optimism, fueled by robust macroeconomic fundamentals, solid earning expectations, and favorable market conditions, is driving the DSE's bullish run, and it is expected to continue as long as these factors remain in place.
