The benchmark index of Dhaka Stock Exchange (DSE) posted over 35 per cent gain in the first nine months of this year as institutional investors have put fresh funds on large-cap stocks.
The key DSEX index now holds its firm position at above 7,000-point level as buoyancy has added strength to the equity indices amid growing investor confidence, market insiders said.
Since January 1, 2021, the DSEX has surged by 1,927 points or 35.67 per cent to settle at 7,329 on September 30, the highest since its launch about nine years back.
The DSEX, designed by Standard and Poor's (S&P) based on the free-float method, was introduced on January 27, 2013, replacing the then key index-DGEN. The DGEN had hit its all-time high at 8,918 recorded on December 5, 2010, when the market saw a bull run before a crash.
Two other DSE indices also soared during the nine-month period. The blue-chip DS30 index, which groups 30 prominent companies, gained 38 per cent or 747 points to finish at 2,710 while the DSE Shariah Index climbed 28 per cent or 350 points to close at 1,592 on September 30.
The market capitalisation of the prime bourse also rose by Tk 1,333 billion or nearly 30 per cent during the period under review to reach 5,815 billion on Thursday, the last trading day in September.
The daily turnover, another important yardstick, clocked in at about Tk 20 billion on an average during the January-September period.
Market analysts said that although shares of many low-performing companies saw an unusual price hike during the period under review, large-cap stocks contributed the most to the index rise.
Many stocks with poor dividend payment records and hyped-up insurance stocks jumped three to four times this year, but their contribution to the index was insignificant, said an analyst at a leading brokerage firm.
Top positive index contributors were Beximco, Investment Corporation of Bangladesh, Beacon Pharma, LafargeHolcim, Beximco Pharma, United Power, Walton and Grameenphone, he said adding that banks and some institutional investors poured money into the market with a focus on the stocks with sound fundamentals, which ultimately pushed the index higher.
Institutional investors' funds have also continued to flow into the stock market as they took advantage of the central bank's incentive package and actively made investment, resulting in the rise of index, Khairul Bashar Abu Taher Mohammed, CEO of MTB Capital, told the FE recently.
He noted that the improving pandemic situation, extended credit facility, gradual economic recovery and lower interest rate on bank deposits helped keep the investor confidence high.
"Many good issues are still lucrative, but investors should be cautious about buying overvalued stocks in order to avert any misfortune," he added.
The market was mostly bullish during the period under review amid growing investor confidence driven by various regulatory measures, which lured the investors to park their funds on stocks, said a stockbroker.
He said the corporate tax cut for the listed manufacturing companies in the current fiscal year has further boosted the investors' optimism.
The Chittagong Stock Exchange (CSE) also performed well in the nine months ended on September 30, 2021, with the CSE All Share Price Index (CASPI) soaring 5,785 points to settle at 21,377 and the Selective Categories Index (CSCX) rising 3,432 points to close at 12,835 on September 30.
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