Economy, Business And Markets

Bearish Trend Dominates TSE

Bearish Trend  Dominates TSE
Bearish Trend  Dominates TSE

After Iran and the P5+1 group of six world powers decided to extend their nuclear talks for another seven months hours before the self-imposed deadline of November 24, most of the skeptical individual investors have opted for getting rid of shares. The move drastically pushed the TEDPIX down at Tuesday’s close.

Due to the unofficial expectations on poor performance of the listed companies at the stock market, irregular behavior was dominant among most of the investor zone, an idea that has strongly been rejected by most of the market analysts.

The extension of the nuclear talks is not negative at all, Hossein Khezli Kharazi told FNA, adding that “Tuesday’s trade was witnessing emotional behavior of both individual and institutional investors.”

As was estimated before, flimsy information set long sell-off lines for various companies’ shares, mostly for financial groups and auto industry.

According to the TSE’s website, the TSE’s main index (TEDPIX) dramatically pulled back and wiped out big chunk of its recent gains, after plunging 1,208.1 points or 1.59 percent to settle at 74,740.9.

The benchmark’s broad retreat was accompanied by negative contribution of the TSE’s indices in full, after all indices lost more than 1 percent, recording the most negative day within the past few months.

The first market index slipped 968.5 points or 1.72 percent to 55,344.2. The second market index fell 1,862 points or 1.27 percent to end at 145,137. The free floating index dropped 1,736 points or 1.97 percent to stand at 88,454.1. The industry index descended 837 points or 1.33 percent to 62,122.6, and the blue chip index was down 73 points or 2.08 percent to finish at 3,431.4.

The sloppy period drastically weighed on the volume and value of the trades, as almost 419 million shares were traded, valued at 1.3 trillion rials. The trade volume recorded a plunge of close to 70 percent, which was mostly due to the long lines of sellers facing uninterested buyers at the TSE.

Persian Gulf Petrochemical Industry Company had the most negative impact on the TEDPIX’s sentiment. Mellat Bank and National Iranian Copper Industries Company were other crucial laggards to the TSE’s gauge.

The TSE’s benchmark has been seesawing all through November, with stocks contributing to push the TEDPIX to the new highs within the past six months, though ambiguities along with scattered unauthorized information have found way to push the TEDPIX down.    

Newcomers at the equity market usually get enticed to pour money in the market when the situation is calm and a bright future is expected, but lack of concrete strategy can easily shake them to lose steam.

Market analysts stress that investors should be cautious as they look ahead and take long-term investment into consideration instead of being shaky about daily challenges, which may not be a sustainable trend in the long run.

The only concern would be the possibility of a budget deficit. The oil price has fallen off the cliff, and given the new challenges facing the national economy, some related industries may suffer from an imminent deficit, although some may gain due to the low price of raw materials.

To conclude, the Rouhani administration has successfully rolled back the negative pace of economic growth within the past year. Given the status quo, which is not expected to change according to analysts, speculations over the future of the stock market may remain the same.