Riding on policy support from both capital and money market regulators, the stock exchanges witnessed some recovery in the post-shutdown period, said the Bangladesh Bank in its November review.
The central bank further said it is optimistic that the capital market will be vibrant again soon.
Losing over 27% over five consecutive quarters, DSEX, the key index of Dhaka Stock Exchange (DSE), has rebounded with a staggering 22% gain in the July-November period.
The premier bourse stood at 5,133 points at the end of Wednesday's trading session; thanks to monetary easing by the central bank and confidence building measures by the securities regulator during the pandemic which drew in investors at a cheap price level.
Following a prolonged depression on the market of more than a year, the central bank, in February this year, allowed banks to form a Tk200-crore low interest special fund to invest in the stock market.
However, in November, the Bangladesh Securities and Exchange Commission (BSEC) placed the proposal to the central bank for a Tk15,000-crore fund to revive the capital market.
As of 10 December, banks have invested Tk700 crore in the market, according to the central bank's data.
The largest investment comes from United Commercial Bank followed by the Rupali, Pubali and Janata banks.
Analysts have lauded the central bank for significantly reducing the policy rates alongside increasing the fund supply to the money market for helping revive the economy as well as the market.
The central bank said to revive the ailing capital market, it has issued a guideline regarding equity exposure for banks involved in the private sector infrastructure projects or project-related companies.
"Now, special purpose vehicles, alternative investment funds or similar funds – approved by the securities regulator – can be used by the private sector in power and energy, tourism and digital infrastructure projects or project-related companies which have already been adopted by banks in order to create market liquidity, increase the quality of investment and reduce the risk of banks' equity exposure," it added.
According to the November edition of "Capital Market Development in Bangladesh," the monthly turnover at the Dhaka Stock Exchange (DSE) in November was 264% higher than that of June.
The port-city bourse Chittagong Stock Exchange (CSE) is also enjoying nearly 7% more trading volume compared to that of a year ago.
Meanwhile, the recovery has made stocks more expensive than the post-holiday period.
At the end of June this year, the average price to earnings ratio at the DSE hit its long-term bottom around 10, which crossed 12.98 at the end of November.
Also, the average dividend yield at the premier bourse came down to 3.73%, which went above 5% during the extreme fall in March.
Cautious investors look for low price to earnings ratio and high dividend yield to make sure that they are not overpaying for stocks.
DSE Director Shakil Rizvi said the Bangladesh Bank and BSEC are trying hard for a vibrant capital market.
They have already undertaken a few initiatives to overcome the liquidity crisis facing the market.