Economy, Business And Markets

Stocks Roar Back, Recovering Losses

Stocks Roar Back,  Recovering LossesStocks Roar Back,  Recovering Losses

Stocks at the Tehran Stock Exchange (TSE) maintained 10 days of winning streak to portray a momentum at the equity market that stocks are roaring back to gradually wipeout TSE's massive 12-percent nosedive since nuclear talk's extension on November 24. The TSE data illustrate that the TEDPIX gained 516 points or 0.79 percent in the week that ended February 4 compared with the prior trading week to wrap up the week in green, and settle at 65,771.6.

The first market index rose 457 points to 48,488, and the second market index pulled higher 511 points to stand at 129,110 and post 0.95 and 0.4 percent respectively.

More than 3.3 billion shares changed hands within 5 working days, valued at almost 6.5 trillion rials to surge 77 and 86 percent in trade volume and value respectively.

Among listed industries at the TSE, mining exploration with 21.45 percent, publishing and printing with 20.7 percent, and medical instruments with close to 17.8 percent growth, had the most lucrative trades.

Tiny surges between January 24 and February 4 pushed the benchmark to register almost 0.96 percent growth.

At a time when the economy is shaky due to a variety of factors, small but persistent rallies amid all-embracing bearish trend at the equity market can be considered a revival for most of the devaluated listed firms.

The extension of nuclear talks between Iran and the P5+1 has triggered the benchmark’s massive retreat; however the oil price slump has intensified the equity market’s selloffs. It should be noted that there have been other indicators that weighed on the TEDPIX and panicked investors.

Despite the fact that ambiguities are still rippling all around of the stock market, the pace of recovery is increasing. The uplift and the cooled sentiment can be viewed from different aspects.

> Glimmer of Hope

The recent speculations about the ongoing talks indicate that both sides are ready to come to some sort of accord, because failing to do so, may bring dire consequences both for Iran and the P5+1.

Our bottom-up analysis shows that the equity market's performance is directly tied to the outcome of the nuclear talks, as sanctions can be lifted once Iran and the 5+1 strike a comprehensive nuclear accord. The recent plummet after the nuclear extension revealed hypersensitivity among investors.

US Secretary of State John Kerry is to hold talks with his Iranian counterpart in an effort to secure a deal on Tehran's nuclear energy program, AFP quoted a US official as saying on Thursday. Upbeat news is expected to come out of the negotiations.

Massive devaluation among most of the listed companies at the TSE provides unique opportunity to garner high yielding companies' shares. The lowest average Price Earnings ratio (P/E) of 5 companies is said to be another practical reason for the expected bullish trend once the sanctions are lifted.

The slowdown, which is rippling in rival markets including foreign exchange and gold coins, also triggered a lift at the equity market. Given the recent efforts by the administration to address prevailing challenges at the TSE, and positive speculations over the nuclear talks, the rebound mood is expected to extend at the stock market.

The embattled energy sector as another factor that has dramatically endangered most of the oil-relevant companies at the TSE, is likely to shift its sentiment with the recent surge in crude price. Most market analysts believe oil leverage dramatically weighs on the TEDPIX. Crude price rebound is also lifting other equity markets across the world.

Asian markets traded mostly higher on Friday as rising oil prices helped boost investor's confidence, with the price of US oil and Brent crude rising more than 4% to $50.48 and $57.57 a barrel respectively in New York.

The recent positive change at the TSE was minimal, however such a continuous uptrend in a market that has been hit hard by various jitters, and is still grappling with gloomy prospects, could bring optimism to unsettled investors to mull over flocking back to the equity market.