Stocks extended their January bull run into February with Tehran Stock Exchange's overall index hitting a fresh 13-month high on Monday, as sheer optimism around the lifting of sanctions and the prospects of strong future earnings drove up share prices.
Stock gains came at a clear break from international trends. While weak oil prices thrashed equities around the world, petroleum-related shares were the main risers in Iran's market.
However, most analysts remained skeptical of the ongoing rally, saying market fundamentals have remained unchanged.
TSE's main index jumped 2.52% and closed just shy of the 73,000-rial mark at 72,912.80 points. Petroleum and multi-industry holdings were the main winners of Monday's trade.
Stocks on the TSE jumped on Monday after a small setback on Sunday, when they edged down 0.3%, breaking an eight-day back-to-back winning streak.
The smaller, more nimble Iran Fara Bourse not only matched the TSE move for move, it even went further. Its main index, the IFX, surged 2.76% to a seven-month high of 778.65 points on Monday, with its petroleum heavy group of stocks rising to record highs.
Equity indices on both the $83 billion TSE and the $14 billion IFB are at record highs. Shares climbed all of January as the nuclear deal between Iran and the United Nations Security Council went into effect, ending years of draconian sanctions.
The deal, struck in July between Tehran and world powers, is a turning point in Iran's history. With the lifting of sanctions, commercial costs will drop, commercial lenders will be able to reconnect with the global financial system and billions of dollars will be released to the Central Bank of Iran and in turn government coffers.
Tough sanctions and mismanagement during the administration of former president Mahmoud Ahmadinejad, left the government and the private sector in ruins. The lifting of sanctions opens the way to rebuilding Iran's economy.
Sanctions have forced businesses to work under their full capacity. Just getting back on the stool will add to growth markedly, despite poor domestic and international economic conditions.
Moreover, sanctions relief opens the way to foreign investment and the administration of President Hassan Rouhani is making the most of it. Rouhani went on a tour of Europe and signed deals worth billions of dollars mainly with Italian and French companies, including one for the purchase of 118 airplanes from Airbus, backed by Italian insurer SACE.
Meanwhile, the rial remained relatively stable, just losing slightly against currency majors and helping future corporate prospects.
The yearend will also see many bonds reach maturity and the money could turn towards stocks.
If those who have remained skeptical so far join in on the buying spree and money shifts from the money market to stocks, the markets will become even more erratic.
TSE, IFB Daily Report
Tehran Stock Exchange’s all-share index TEDPIX jumped 1,794 points or 2.52% to settle Monday trade at 72,912.8.
More than 2 billion shares valued at $128.7 million changed hands, with daily trade value growing more than $30 million compared to the prior trading day.
The Price Index gained 688.40 points or 2.52% to end at 27,979.3.
The First Market Index jumped 1,274.60 points or 2.54% to reach 59,398.9.
The Second Market Index rose 3,970.90 points or 2.49% to post 163,132.9.
The Industry Index added 1,584.10 points or 2.69% to register 6,571.8.
The Free Float Index was up 2,144.16 points or 2.72% to hit 80,898.40.
The TSE 30 Index gathered 87.80 points or 2.92% to settle at 3,092.3 while TSE 50 Index scored 72.80 points or 2.52% to close at 2,690.1.
More than 78% of the listed companies worked in favor of the benchmark.
Persian Gulf Petrochemical Industries Company, with a P/E ratio of 6, provided the biggest boost to TEDPIX by 202.79 points, followed by Parsian Oil and Gas Development Company and Ghadir Investment Company with 119.81 and 103.34 points respectively.
Iran Mobile Telecommunications Company had the most negative performance with 6.58 points, followed by Bank Ansar and Behhshar Industries Development Company with 6.11 and 6.03 points respectively.
Iran Fara Bourse’s main index IFX jumped 20.9 points or 2.76% to stop at 778.65, reaching its highest since August.
More than 445 million securities valued at $52.4 million changed hands in 53,000 transactions with the daily trade volume nearly doubling compared to Sunday.
Sobhan Investment Company had the highest trade volume and value with 77.9 million shares worth $3.6 million changing hands respectively.
Marun Petrochemical Company, Tehran Oil Refining Company and Iranian Petrochemical Investment Company provided the biggest boost to IFX.
Ravan Fanavar Industrial Engineering Company had the highest increase in shares’ value, while Chaharmahal Sugar Company registered the highest decline.
About 443,000 Islamic Treasury Bills valued at $10.54 million were sold out.
