Business And Markets

TEDPIX at Record High in 10 Months

TEDPIX at Record High in 10 Months
TEDPIX at Record High in 10 Months

A bullish trend is reigning over equity market once again, after the Tehran Stock Exchange's (TSE) main index (TEDPIX) managed to surge 1.75 percent on Monday, notching a record high in 10 months, which is mostly due to upbeat political and economic news.

Stocks broad rally started at the beginning of the trading day, pushing a record high at noon. The rally highlighted upbeat news over the stock market, as the TEDPIX's surprising jump in 10 months persuaded individual investors to flock back to the equity market.

The move caused investors to line up for high yield shares, while there were no selloffs at the TSE and traders held on tight to their booming shares.

"It was the most noticeable bull market in the past 10 months, after the flow of new liquidity found its way to the equity market," Keivan Sheikhi, head of the statistics and information department at the TSE told Financial Tribune.

According to the TSE's own website, the bullish trend helped all indices to firmly settle in green, after the TEDPIX surged 1267.6 points or 1.75 percent to end at 73,548.6. The first market index climbed 985.1 points or 1.85 percent to 54,164.5. The second market index hiked 2,157 points or 1.51 percent to 144,771. The free floating index soared 1,639.2 points or 2 percent to end a spectacular trading day at 83,285.2. The industry index rose 1,042.5 points or 1.7 percent to close at 62,365.3, and the blue chip index went up 59.9 points or 1.82 percent to end its stellar trading day at 3,360.

The TSE's bustling trading day on Monday dramatically shifted the risk-averse investors' opinions on the market. This group suffered the most from the seesaw trading days and the market slump in the past six months.

If one looks at the trading volume and value of the TSE, it is becoming far more evident that a new short term trend is emerging.

Given the TSE's information, almost 917 million shares changed hands, valued 2.97 trillion rials, which demonstrated a nearly 80 percent increase compared to the previous trading day.

Iran Khodro came top, as it enjoyed the highest volume of trades among all listed companies. Tejarat Bank stood next, and Chemidarou Company came third.

In trading value, Chemidarou Company had the best trading day, and Iran khodro took the second place.

Mobarake Steel Company's trade left the most positive impact on the TSE's benchmark, while Pardis Petrochemical Company was among the rare companies that failed to help lift the TEDPIX, as it left the most negative impact.

The TSE's bustling trading day demonstrated the Tehran stock market's capabilities, and its hidden potential to catch the eye of portfolio investors.

Market analysts were expecting the upward trend at the TSE, but the soaring trend of the Tehran bourse on Monday surpassed expectations, as the TEDPIX recovered most losses it incurred over the past six months.

Record High Contributors

A. Recent developments regarding the ongoing nuclear negotiations between Iran and the P5+1, indicate that a comprehensive agreement will likely be reached before the November 20 deadline.

Iran's top nuclear negotiator announced on Monday that the two sides are more likely to reach the agreement, if the P5+1 respect Iran's rights, and proves their goodwill.

As most of the traders' decision making process hedges on the comprehensive deal, they are already showing signs of relief and willingness to engage in the equity market.

B. Companies are unveiling their six monthly reports, and as was estimated by market analysts, the Subsidy Reform Plan of the Rouhani administration has positively contributed to the companies' growth.  

Market investors are keeping a close eye on industries that have had the most substantial growth. Further declarations of listed TSE companies' reports would lead to further dynamic trading days.

"Considering the fact that the government's Subsidy Reform Plan couldn't practically reveal its impact on the firms within the first quarter, skeptical investors were tracking the second round of reports, which is clearly promising more positive numbers for most industries," Sheikhi added.

C.  The stability of the equity market within the past few weeks, coupled with the 5 consecutive upward trading days at the TSE, is convincing unsettled investors to consider returning their capital to the stock market.

"It has been about a month that the TSE is back on track, prompting market traders to come to the conclusion that it might be a turning point to get back to the equity market," SENA quoted Mahmood Reza Khaje Nasiri, head of supervision on exchanges department as saying.

Khaje Nasiri also announced that the new emerging situation has lead investors to line up for the attractive shares with high yields. On the other hand, a new flow of liquidity has boosted the capital market.

As investors are flocking back to the equity market, and with their ever increasing demands on the shares, the shares' value is going up.

Although the economy is grappling with a prevailing recession, the administration's approach has been to tackle the economic challenges and help the country step out of the recession. Khaje Nasiri stressed that the government has been successful in the overall economic recovery. The most noticeable proof is the companies' positive six months reports.

D. Stocks hit rock-bottom value, which was a sign of profitable trade for shaky traders. The low Price Earnings ratio or (P/E) was another contributor that convinced traders to decide to bolster their portfolios.

"The low P/E ratio was quite convincing for traders, as it is unimaginable to expect a much lower P/E in the equity market," Sheikhi said.

Traders dramatically lost on their investments within the roller-coaster trading days of the past six months, and are now recovering their losses, with the hope of more lucrative trading days.

Stocks have begun to bear fruit as rumors surrounding the dissolution of Western sanctions against Iran's nuclear energy program are becoming ever more frequent. This trend will presumably accelerate once more tangible results come out.