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The central bank’s tight monetary policy for the second half of FY26 is expected to benefit listed companies with large cash balances, as higher interest rates allow them to earn more from deposits and short-term instruments.

Market analysts say equity participation may improve gradually after the election as government bond yields soften and liquidity conditions ease, encouraging some funds to move from fixed-income instruments into equities. Treasury bond yields currently range from about 10.23 percent to 10.68 percent for tenures of two to 20 years.

The gap between the policy rate and bond yields points to a neutral to moderately positive outlook for stocks, provided inflation continues to fall and macroeconomic stability holds. Stable exchange rates—supported by a market-based regime, steady remittance inflows, and improving foreign exchange reserves—are also expected to help restore foreign investor confidence.

Import-dependent companies may see margin stability if exchange-rate calm and softer global commodity prices keep input costs under control. Pharmaceutical firms are seen as key beneficiaries, as lower currency volatility could support gross margin recovery. Leading drug makers such as Square Pharmaceuticals, Renata, Beximco Pharma, and Navana Pharma are expected to gain from this trend.

In contrast, highly leveraged companies will continue to face heavy interest burdens under the high-rate environment, weighing on earnings and limiting access to fresh funding. Sectors such as cement, steel, real estate, and private power generation—already under stress—may come under additional financial pressure.

Companies with surplus cash and fixed deposits are likely to keep enjoying strong interest income and may negotiate higher rates on their deposits. Square Pharmaceuticals, for example, held nearly Tk 60 billion in net cash as of December last year and earns significant non-operating income from these funds. Cash-rich state-run firms such as Jamuna Oil, Padma Oil, and Meghna Petroleum are also expected to maintain elevated income from deposits and investments.

Selected banks and non-bank financial institutions with strong balance sheets stand to benefit from the high-rate cycle through wider net interest margins and possible gains on government securities as yields decline. Well-managed banks with high liquidity and low non-performing loans are likely to sustain growth in Treasury income. Institutions such as BRAC Bank, City Bank, Eastern Bank, and Eastern Bank reported notable profit growth in the January–September period last year, driven largely by income from government securities.

Weaker financial institutions under regulatory action are expected to attract limited investor interest until the outcome of reform measures becomes clearer.

Overall, the prolonged high policy-rate environment raises financing costs and the cost of capital for listed companies, which may restrain equity valuations and keep earnings growth modest in the near term. Low private-sector credit growth, combined with elevated interest rates, is also likely to delay capacity expansion and dampen investment activity in the short run.