In a bid to revitalise the capital market, the finance minister made several proposals in the budget, making dividend income tax-free and increasing the tax gap between listed and non-listed companies.

However, if a listed company fails to declare at least 10 per cent dividend or declines to distribute the declared dividend within the time limit specified by the Securities and Exchange Commission (SEC), the company will be taxed at the rate of 37.5 per cent, the finance minister said.

Besides, Saifur proposed investment in purchase of shares of listed companies, during the period from July1, 2003 to June 30, 2005, be accepted without explanation by tax department.

"However, if the shares are sold or transferred within two years of purchase, this facility will not be allowed," Saifur said.

"The role of capital market in industrialisation is very important." The measures will revitalise the capital market, he hoped.

According to the existing tax laws, shareholders are to pay tax on the dividend they receive.

Following the announcements, the textile stocks rallied spectacularly with M Hossain Garment gaining 9.09 per cent followed by Monno Fabrics gaining 8.42 per cent in two days' trade.

The textile sector was followed by cement sectors with Aramit Cement taking the lead gaining 4.50 per cent in two days' trade followed by Meghna Cement gaining 3.50 per cent.

Experts attributed the rise to protection to the sector which came in the form of supplementary duty on imported cement.

Market analysts predict good days ahead as some more companies are expected to cash in on similar protection announced in the FY 2003-2004 budget.

He said the local companies like Usmania Glass and Eastern Cables should get some protection along with the cement sector which should enable these companies to improve their financial statements in the coming year. The government announced supplementary duty on imported glass and imported copper/aluminum wire

Lucrative IPO ahead

The year 2003 and 2004 may open the window of opportunities for investment in the primary market.

Sources said a total of 11 private commercial banks and six leasing companies are going public during the period. Banks and leasing companies have a good profit and dividend track records, which should help in broadening the capital base of the market and give higher yield to the investors.

Stock market sources said most of the issues are expected to be offered at face values while few may charge premium.

"But the prices would still be at a discounted price compared to respective book-values," one expert said.

He said the institutional players like merchant bankers, banks and other institutions are also on the rise and it will increase with the Investment Corporation of Bangladesh (ICB) coming up with a new mutual funds.

Meanwhile, price index at Chittagong Stock Exchange marked slight rose for the second consecutive day yesterday with the gainers dominating over the losers.

CSE Selective Index also gained 4.28 points or 0.37 percent to close at 1154.72 points yesterday from previous day's 1150.44 points.

Of the 60 listed issues traded yesterday, 28 gained, 22 declined and 10 remained unchanged.