Market keeps surging on capital gains tax cut
The daily turnover at the DSE jumped by 48% from the previous session, reaching Tk839 crore
Stocks surged for the second consecutive day, with the Dhaka bourse's key index reaching a 13-day high on the back of a recent capital gains tax cut that bolstered investor sentiment.
On Tuesday, DSEX, the broad index of the Dhaka Stock Exchange (DSE), gained 112 points, or 2.1%, to reach 5,365, while the blue-chip index DS30 gained 30 points to close at 1,967.
Market turnover surged by 48% to Tk839 crore, marking its highest level in 48 days as investor participation intensified. The market cap at the DSE also increased by Tk5,865 crore, reaching Tk6.72 lakh crore.
Among the traded stocks, 304 advanced, 65 declined, and 30 remained unchanged.
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In its daily market review, EBL Securities noted that the benchmark index of the capital bourse extended its gaining streak, driven by positive investor sentiment following the recent reduction in the capital gains tax rate, which continued to uplift activity across the trading floor.
Building on the positive momentum of the previous trading session, buyers continued to dominate market activity throughout the trading session despite some short-term profit-taking, leading the market to a recovery after its recent downturn, EBL Securities added.
However, it cautioned that the sustainability of this upward trend depends on the earnings declarations of listed companies for the July-September quarter, as well as broader political and economic stability.
The National Board of Revenue (NBR) has set a 15% tax rate on annual capital gains exceeding Tk50 lakh from the buying and selling of shares in listed companies, regardless of the holding period. Previously, a 30% tax rate (40.5% effective rate with surcharge) applied to shares sold within five years of purchase, while shares held for over five years were taxed at 15% (20.25% with surcharge).
In its announcement, the revenue board expressed optimism that both domestic and foreign investors would be more inclined to invest in the country's capital market following the reduction in the maximum tax rate on income and surcharge from 40.50% to 20.25% (a rate applied for high-net-worth individual taxpayers) for the period from 1 July 2024 to 30 June 2025.
SM Galibur Rahman, Head of Research and Strategic Planning at Shanta Securities, told The Business Standard that the announcement sent a positive response to the market.
While Abdul Kader Nabil, Head of the Corporate and Intermediaries Department at LankaBangla Securities, emphasised the need for further reforms, including a reduction in the tax rate on dividends, which he identified as a significant challenge for the capital market.
EBL Securities reported that Islami Bank was the largest contributor to the index's rise, adding 37 points, followed by Square Pharma, Renata, Beacon Pharma, and Best Holdings.
On the sectoral front, pharmaceuticals contributed the most to total turnover, accounting for 21.5%, followed by banks at 17.1% and textiles at 8%. Most sectors displayed positive returns, with travel, life insurance, and ceramics sectors showing the highest gains on the bourse.
Fu Wang Food topped the gainers' list, with its share price jumping by 10% to Tk14.3, followed by Rupali Life Insurance and National Life Insurance. Conversely, Lovello Ice- Cream was the top loser, with its unit price falling by 5.12% to Tk88.8 each, followed by United Finance and Peninsula Chittagong.
