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The Dhaka Stock Exchange (DSE) recorded its highest daily turnover in nearly two years on Sunday as growing optimism over regulatory reforms and capital market-friendly fiscal measures drew investors back to equities.

Turnover, a key measure of market activity, rose to Tk 16.70 billion, up 17 per cent from the previous session. It was the highest daily turnover since August 2024.

The market rally also gathered pace, with the benchmark DSEX index gaining 45.17 points, or 0.78 per cent, to close at 5,849, its highest level in almost two years.

Market analysts said broad-based buying of fundamentally strong stocks at attractive valuations, coupled with confidence in ongoing reforms, continued to support the rally.

Md Sajedul Islam, a shareholder director of the DSE, said rising turnover reflected increased participation by both institutional and retail investors.

“The steady rise in turnover suggests that institutional investors are becoming increasingly active, while retail investors are also returning to the market.”

He said investor confidence had also been strengthened by capital market-friendly measures included in the national budget, which are expected to improve the competitiveness of listed companies.

Market sentiment received another boost after Prime Minister Tarique Rahman announced a broad reform package for the capital market last week, aimed at restoring stability, rebuilding investor confidence and ensuring accountability for market manipulation, analysts said.

Akramul Alam, Head of Research at Royal Capital, said supportive fiscal measures and the Bangladesh Securities and Exchange Commission’s (BSEC) reform agenda had significantly improved investor confidence.

“The market remained undervalued for a long time, with the overall market price-to-earnings ratio standing at only 9.3. Investors are now gradually regaining confidence and increasing their exposure to equities.”

He said many fundamentally strong companies were still trading at attractive multi-year valuations, encouraging investors to inject fresh funds in anticipation of long-term returns.

Large-cap stocks led Sunday’s advance. BRAC Bank, Walton Hi-Tech Industries, Pubali Bank, Islami Bank Bangladesh and IDLC Finance together contributed nearly half of the benchmark index’s gain.

Alam said confidence had strengthened further since chartered accountant Masud Khan assumed office as BSEC chairman in early June.

“The new BSEC leadership has sent a strong message that restoring discipline, transparency and investor confidence is now a top priority.”

The securities regulator has already introduced several reforms, including lifting floor prices on the remaining two stocks, restoring the stock exchanges’ authority to determine circuit breakers and strengthening market surveillance.

The BSEC has also announced plans to review margin loan rules, simplify public issue regulations, introduce a direct listing framework for eligible private companies, launch day netting for selected quality stocks and shorten the settlement cycle to T+1.

“The regulator’s reform initiatives have created positive expectations among investors, who believe the market is moving towards a more transparent, efficient and well-governed environment.”

The blue-chip DS30 Index rose 23 points to 2,200, while the DSES Shariah Index gained 3 points to 1,192.

Market breadth remained positive, with 199 stocks advancing, 156 declining and 37 remaining unchanged.

The mutual fund sector posted the strongest performance, rising 6.4 per cent, after the BSEC chairman pledged to revise the Mutual Fund Rules. Unit prices of 32 of the 36 listed close-ended mutual funds increased.

Lavello Ice Cream was the day’s most-traded stock, with shares worth Tk 697 million changing hands. Bangladesh Shipping Corporation, Malek Spinning, Eastern Housing, Beximco Pharma and IT Consultants were also among the most actively traded stocks.