Stocks at the Tehran Stock Exchange were knocked hard in the past week, ended December 3, with the TEDPIX wiping out almost 3 percent of its value to record one of its worst weeks within the current Iranian year, pushing the investors further into the irregular decision-making behavior.
The equity market has been hit hard recently by market jitters, causing the benchmark to dramatically drop on investors’ overreactions, and their short-term investment attitude.
The unprecedented fluctuation in the foreign currencies market, a dramatic cut in oil prices, and the shaky sentiment of investors were among the most crucial indicators that contributed to the TSE’s steady fall in the past week.
The extension of nuclear talks between Iran and the P5+1 couldn’t meet the investors’ expectations over the future of sanctions. Once they were digesting the news, oil price freefall spurred concerns over the likelihood of a budget deficit for the upcoming year.
The latest development that impacted the stock market was the Central Bank of Iran (CBI)’s announcement of inflation rate for the month of Aban (October 23-November 21).
According to this report, the inflation rate ticked higher by 1.5 percent compared to the prior month, which is totally in accordance with the increasing trend of the Consumer Price Index (CPI).
The recent statistics triggered alarm on a possible inflation hike, which consequently left a negative impact on the stock exchange.
It is hard to evade the conclusion that Iran’s hobbling economy is too vulnerable to the unofficial reports and speculations toward the prospect of the economy.
Most market analysts recommend long-term investment in the equity market, while large number of scalpers and day traders tried to place their bets with regard to the rapidly fluctuating situation or based on the inside information, though a very few people have access to these valuable information.
Unsettled investors avid count on their unconsidered speculations, which are mostly based on unofficial reports, or their overreactions to the latest political and economic developments.
TSE Weekly Report
The TSE’s benchmark plummeted further this week to record a 3 percent plunge, with the financial index leading the losses.
According to the TSE data, the TEDPIX fell 2,216 points or 2.99 percent to end at 71,860.2. The first market index lost 1,978 points or 3.61 percent, dramatically fall to 52,793.8. The second market index pulled back 2,092 points or 1.45 percent to settle at 142,275.1. The free float index dropped 3,216 points or 3.77 percent to completely wipe out its tangible gains in November’s first week.
The industry index was down 1,443 points or 2.34 to finish at 60,322.3. The blue chip index in line with other indices sank 149 points or 4.41 percent to 3.222.2, and the financial index heavily lost 9,708 points or 6.6 percent to end at 137,422.
Given the recent sharp fall of the TSE’s gauge, the overall index added to its losses since the beginning of the year, notching 9.1 percent.
All indices are still in red as has been the case for the past 8 months, with the industry index leading them with more than 14 percent, demonstrating a slump in the industry.
Total value of trade recorded a 10.9 percent decline compared to the previous week. In addition, the volume of trade also demonstrated a 19.4 percent plunge.
Analysts say the TSE’s bearish trend won’t persist, and will soon shift to an uptrend, so it is very important to take the following factors into consideration.
Providing transparent information to investors is a key factor in financial markets. In addition, market development fund - as a key contributor to the market’s stability along with the market makers, should precisely track the equity market, helping it to stay on track.
Educating the investors is also crucial, as they can precisely analyze the outlook of the market, and avoid being influenced by any political and economic development when making their investing decisions.
