Economy, Business And Markets
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Shaky Investors Add to Market Volatility

Shaky Investors Add to Market VolatilityShaky Investors Add to Market Volatility

The equity market is grabbing the headlines again, thanks to its increasingly volatile situation, which is mainly caused by the unsettled investors’ emotional investing bias.

The Tehran Stock Exchange (TSE) extended its losses for the second week in a row, as the irregular behavior of individual and institutional investors heavily weighed on the stock market.

Analysts have associated the recent TEDPIX fluctuations with the overreaction of some investors to Monday’s news of seven-month extension of nuclear talks, as well as the scope of their expectations, which has made them line up and sell off shares, although the stocks have already hit their rock-bottom value.

Market analysts believe that those lined up to get rid of shares would be real losers, as there has not been any solid indicator of poor performance of listed companies or a drastic change in the market’s trend.

Technically, the return of volatility shouldn’t come as a huge surprise. What’s really surprising is that most of the semi-annual reports of the listed companies at the TSE suggest that they have managed to demonstrate a fair performance, despite a lingering economic stagnation.

The recent decline in the stock market has put investors on the edge, as they panicked and started to sell off their shares. This group of people prefers to hedge their bets, and is more likely to invest outside of the stock market for the time being.

One alternative market is banking sector in Iran, with some banks offering interest rates of more than 25 percent annually. TSE officials and all market analysts have underlined that a high interest rate is always a contributing factor, encouraging investors to take their money out of the equity market.

Many investors watching the market may jump to buy stocks immediately after a big surge in stock prices, hoping to take advantage of the transient situation.

Given the multiple rallies that were recorded just before the recent downtrend, the current downward trend is not expected to lead to a market crash. The TSE’s ups and downs are mostly associated either with the investors’ unpredictable behavior or the wave of ambiguities that cloud the judgment of investors every now and then.

According to analysts, holding investment training courses can significantly contribute to the education of newcomers in the market, helping them to make decisions and judge the market sentiment based on analysis and hard data.

Financialtribune.com