Economy, Business And Markets

Stocks Rebound to Trim Huge Losses

Stocks Rebound  to Trim Huge LossesStocks Rebound  to Trim Huge Losses

Stocks staged a broad rally at the Tehran Stock Exchange (TSE) at Wednesday’s close to compensate part of the huge losses incurred in the prior trading day, with the recently returned refining companies in the spotlight.

According to TSE data, the overall index surged 999.1 points or 1.62 percent to settle at 62,532, recouping unprecedented losses of Tuesday trading which happened due to massive selloffs of refining companies.

The first market index rose 809.5 points or 1.82 percent to end at 45,317.7. The second market index pulled up 1,478.6 points or 1.18 percent to stand at 127,840.6. The free float index climbed 1,522.8 points or 2.15 percent to 72,210.2. The industry index was up 700.7 points or 1.38 percent to finish at 51,294, and the blue-chip index notched up 64.3 points or 2.29 percent to 2,877.1.

More than 1.26 billion shares changed hands, valued at almost 2.25 trillion rials. The refineries’ return boosted the trade volume and value, while the hidden potential of the equity market is expected to be uncovered once Iran and the P5+1 clinch a nuclear accord.

Tamin Petroleum & Petrochemical Investment Company (TPPIC) with close to 77 points had the most positive contribution to the benchmark. Mine and Metals Development Investment Company and Mellat Bank followed the TPPIC with almost 72 and 69 points respectively.

Wednesday trading was accompanied by lineups for the leading companies’ shares, including the refining companies. A dramatic fall in the value of refining companies’ shares by more than 60 percent triggered demand for their undervalued shares.

While most of the listed firms settled in green, Persian Gulf Petrochemical Industry Company once again weighed on the TEDPIX. North Drilling Company and Fanavaran Petrochemical Company with 7 and 2 points in negative contribution took the second and third place respectively.

The investors’ sentiment was down after 8 months of capital block, which dramatically weighed on the TEDPIX after the refining companies’ comeback on Tuesday, however, overreaction significantly contributed to selloffs.

After the benchmark stumbled in a record free fall on Tuesday, the refining companies’ shares bounced back slightly on Wednesday, to underscore the investors’ gloomy sentiment in the previous trading day.

Refineries have always been a significant sector at the equity market. Excluding the ambiguities hanging over the sector recently, their companies have always been among the highest yielding.

Despite criticism over the opening of the refineries ticker symbol, some analysts consider the move as fundamental for wrapping up one of the most critical challenges which had been squeezing out the equity market.

Market analysts were expecting close to 8000 to 11,000 points plunge after the refineries’ comeback, bourse24 quoted head of the Securities and Exchange Organization (SEO), Mohammad Fetanatfard as saying, adding that: “The SEO managed to mitigate the fluctuations by taking into consideration the approvals issued by the Financial Stability Committee (FSC).”

Commenting on the refineries’ performance in the upcoming year (starting March 21), Fetanatfard predicted the market’s systematic risk to decline, Price Earnings to rise, and the equity market to witness persistent uptrend, “considering the positive atmosphere of the ongoing nuclear talks between Iran and the P5+1 (five permanent members of UN Security Council plus Germany), oil market equilibrium, and stable metal and iron ore prices.”

The refineries’ ticker symbols were closed for almost 8 months, mostly due to lack of transparency in financial statements, feedstock pricing, and tumbling oil prices.

The equity market was gearing up to reopen refining companies’ ticker symbol, as officials were scrambling to wipe out the ambiguities that kept their symbol closed, and imposed massive losses on its investors.

Refining companies have been given five years by the FSC to improve the quality of their products, including aviation fuel.

Moreover, in a meeting between oil ministry officials, managing directors of oil refining and distribution companies listed at the equity market, and the head of the Securities and Exchange Organization (SEO) last month, executive measures were taken to maximize clarification in financial interaction between refineries and National Iranian Oil Refining and Distribution in accordance with the latest government bill, which indicates that the clarification of refining products should be fully implemented in a 5-year period.