Given my background in capital markets, many friends and acquaintances have asked me, to put it simply, how to make money from the Dhaka Stock Exchange post elections, on 12 February 2026.
Our premier bourse opens on Sunday but given how well the benchmark index DSEX has performed this year, backed by favourable fundamentals for many stocks trading at deep discounts with respect to their expected earnings, a favourable remittance environment, and anticipation of relative political stability, it is, in my view, a very good time to enter the market.
Of course, I do not have a crystal ball and I will not pretend to, but the week after elections tends to be driven by post-election euphoria, although Ramadan approaching may have a dampening effect due to shorter business hours.
The benchmark DSEX rose by 1.7 per cent to 5,400 points in the final sessions leading up to today, with turnover hitting a five-month high of nearly Tk800 crore.
While the initial rally was driven by sentiment and anticipation of post-election euphoria, the sustainable path to wealth creation now requires a clinical focus on fundamentals and a keen eye on seasonal liquidity trends. Understanding the interplay between local policy shifts and global macroeconomic pressures is essential for any investor looking to outperform the index in the coming months.
Fundamentals serve as the bedrock of any sound investment strategy in a frontier market. The current environment favours companies with robust balance sheets and transparent governance. Investors should prioritise the banking sector, particularly blue-chip institutions banks trading at attractive valuations, with price-to-book ratios between, in many cases below 2 or 3.
This represents significant value when compared with historical averages and regional peers. The banking sector has already commanded nearly 24 per cent of recent market turnover, signalling that institutional money is positioning itself for a period of structural reform under the newly elected administration. This trend is supported by strong sector performance; the banking index gained 3.0 per cent in the pre-election week as investors bet on a transition from passive liquidity management to active lending.
Technical analysis offers the necessary timing to complement these fundamental picks. Monitoring daily turnover is a vital technical indicator. Sustained turnover above the Tk800 crore to Tk1,000 crore range suggests that the current bull run has the necessary participation to continue. For perspective, turnover hit a five-month high of Tk790 crore just before the election, rising 22 per cent in a single session.
Furthermore, the relative strength of the DSEX suggests that the market is attempting to break out of its long-standing consolidation phase. Investors must also watch for category shifts.
For instance, the pharmaceutical player Techno Drugs Limited is scheduled to move from the ‘Z’ to ‘A’ category on 15 February 2026. Such shifts often trigger an influx of liquidity as mutual funds and institutional players become eligible to increase their holdings in these reassessed counters.
The upcoming month of Ramadan, starting in mid-February, presents a unique seasonal challenge that requires a shift in tactical positioning. Historically, Ramadan leads to a contraction in trading volume as market hours shorten and retail participation dips due to festive spending. This period often sees a rotation into defensive sectors like pharmaceuticals and consumer staples. Certain leading pharma companies remain standout fundamental plays with a P/E ratio less than 10.
Smart investors often use the low-volume dips during Ramadan to accumulate high-quality assets before the market regains its full momentum post-Eid. Data suggests that while returns may not spike during the month itself, the period often sets a “floor” for valuations before the mid-year cycle begins.
International factors will ultimately dictate the ceiling for this rally. The March 2026 meeting of the Federal Reserve is the most significant external variable. Currently, the Fed has held rates in the 3.5 per cent to 3.75 per cent range. A potential rate cut would weaken the US dollar and provide much-needed breathing room for the taka.
Conversely, if the Fed holds rates steady due to persistent inflation, the pressure on Bangladesh’s foreign exchange reserves will remain high. Geopolitical risks also loom, as the new administration must navigate the delicate balance between Chinese investment and Western trade relations. A strategic portfolio should remain diversified across sectors that benefit from domestic growth while maintaining hedges against global currency fluctuations.
The emergence of the BRICS-10 expansion and the push for de-dollarisation add a layer of complexity for 2026. With the 2026 BRICS summit on the horizon, discussions about linking central bank digital currencies and bilateral swap arrangements are gaining traction. For the DSE investor, this means the banking sector’s traditional reliance on Western clearing systems may face a multi-year transition towards a more fragmented global financial order. Investors who ignore these macro trends risk being blindsided by shifts in capital flows that originate far beyond the trading floor in Motijheel.
Successful investing in the post-election era is about recognising that the “easy money” from the initial bounce will be made very quickly. The next phase of the rally will be discerning, favouring those who can distinguish between speculative “Z” category bubbles and the “A” category leaders that are actually generating cash. By combining a “phygital” perspective, i.e., understanding both the physical reality of the economy and the digital transformation of the markets, investors can turn this political transition into a long-term wealth-building opportunity.
Stay tuned for more on how to balance your portfolios at different times of the year.
The author is a leading academic and practitioner in sustainable financing with work experience at BRAC EPL, Morgan Stanley and KPMG. He has received awards for his equity sales from Morgan Stanley and BlackRock.
