Tehran stocks made robust gains Tuesday after a brief correction a day earlier as retail investors continued to inject liquidity into the market.
The main gauge of Tehran Stock Exchange, TEDPIX, gained over 13,670 points and climbed 2.4% to close session at 583,345.
Iran’s stock market is dominated by retail investors while institutional investors are taking a peripheral role as shown by daily trade data.
According to analytical Donyaye Bourse website, retail investors trade reached 54.48 trillion rials ($340 million) on Wednesday and this group bought 40 trillion rials ($250 million) in stocks from institutional traders during eight working sessions since the beginning of Iranian New Year on March 20.
Stocks rallied as reports came in that the government intends to use the stock market for meeting its budgetary needs. This is despite the fact that market analysts have warned about the unusual growth in stock market indicators despite risks that the coronavirus pandemic poses to the already struggling economy.
In an interview with state TV late Monday, the Minister of Economy Farhad Dejpasand said the government plans to offer its shares in state-run companies on the stock market, describing the move a “a big step in funding the government”.
Addressing concerns that Iran’s stock market is too small to absorb huge amounts of liquidity coming from retail investors, Dejpasand said the government aims to strengthen the market by listing more companies.
Surge in foreign currency rates against the rial is seen as another major driver of stock market growth. Besides creating inflationary expectations, soaring value of the dollar could help Iran’s export-oriented companies in the bourse earn more when their forex earnings are converted into rials.
The dollar has strengthened against the rial in the past several weeks, after a period of relative calm, and was traded around 62,000 rials on Tehran’s open market on Tuesday.
In addition, some informed sources have been quoted as saying that banks may cut interest rates on bank deposits. This may further give rise to injection of money into the market as parking money in banks wouldn’t be appealing.
Market Performance
The TSE's main index TEDPIX gained 13,672.17 points, or 2.4%, on Tuesday to end trading at 583,345.86.
About 6.46 billion shares valued at 55.77 trillion rials ($352.98 million) changed hands at TSE for the day.
Trading at TSE and over-the-counter Iran Fara Bourse starts on Saturday and ends Wednesday.
Tamin Petroleum and Petrochemical Investment Company was the biggest winner as its shares went up 14.73% to 4,930 rials per share.
Bushehr Industries Development Cleanser Industry Management Company incurred the biggest loss among all TSE-listed companies and went down 5% to 45,674 rials per share.
Pakshoo Industrial Group Company contributed the most to the benchmark's fall, followed by Iran Mercantile Exchange, Kharg Petrochemical Company and Bushehr Industries Development Cleanser Industry Management Company.
Tamin Petroleum and Petrochemical Investment Company gave the biggest boost to the benchmark index, followed by Persian Gulf Petrochemical Industries Company, Mobarakeh Steel Company and National Iranian Copper Industries Company.
IFX Up 2.3%
Iran Fara Bourse main index IFX gained 169.5 points, or 2.3%, to close Tuesday trade at 7,552.14.
About 7.18 billion securities valued at 58.3 trillion rials ($369.03 million) were traded at the over-the-counter exchange for the day.
Jahrom Power Plant Development Company had the highest number of traded shares as 370.3 million of its shares worth 1.58 trillion rials ($10 million) were traded.
Iran Office Machines Industries Company, Pakdis Company, Shiraz Oil Refining Company and Iranol Oil Company had the most negative impact on IFX.
Esfahan Steel Company gave the biggest boost to IFX, followed by Shahid Tondgooyan Petrochemical Company, Damavand Power Generation Company and Middle East Mines and Mineral Industries Development Holding Company.
