The Tehran Stock Exchange (TSE)’s benchmark headed for a third straight consecutive day of losses, notching a fresh record low following Sunday’s lackluster trade.
Since November 24, when decision was made by Iran and the P5+1 to extend their nuclear talks for another seven months, bearish trend kept dragging down the TSE’s gauge as the news of extension was accompanied by a dramatic plunge in oil price and ever-increasing concerns over a possible budget deficit for the Rouhani administration.
As economic slowdown keeps rippling through the industries and the uncertainties increase over the removal of the western sanctions against Iran, irregular behavior of individual investors still dramatically weighs on the equity market.
Selloff lines have extended unsettled investors’ losses within the past two weeks, pushing most of the shares of the listed firms to hit the rock-bottom values.
According to TSE’s data, petrochemicals, financial group, and automakers were the major market laggards, with the Persian Gulf Petrochemical Industry Company, and Tamin Petroleum & Petrochemical Investment Company leading the losses.
Investors lined up to keep selling off these firms’ shares, especially those of the petrochemical firms, as concerns mount over the future of these companies.
Iran’s oil-based economy has been hit hard, with the oil price falling off the cliff, endangering some giant industries in Iran, including petrochemicals and metals.
Cheap raw material and feedstock will subsequently decrease the end selling price of the commodities in the global market, pushing the local petrochemical complexes to adapt themselves with possible revenue projection cuts. Failing to do so may lead a large group of investors to suffer more losses.
TSE on Sunday
The TEDPIX’s series of downturns was extended on Sunday, after the benchmark dipped 542 points or 0.76 percent, pressing shaky investors to emotionally resorting to a short-term investment approach.
According to TSE’s data, the first market index slipped 322.3 points or 0.61 percent to stand at 52,481.1. The second market index plunged 1,571 points or 1.11 percent to settle at 139,631.9. The free float I index retreated 644.7 points or 0.78 percent to 81,496.1. The industry index dropped 444.7 points or 0.74 percent to end at 59,720.4, and the blue chip index lost 20.9 points or 0.65 percent to finish the day at 3,214.7.
More than 563 million shares changed hands, valued at almost 1.72 trillion rials. Trade volume dropped slightly, although trade value posted tangible gains compared to the previous trading day.
Sunday’s bearish trend included some exceptions as a few companies ended the day in green. According to the parsfinance.ir, the downtrend was mostly due to the individual and institutional investors’ selloffs, although institutional investors garnered rock-bottom valued shares.
Iran Transfo Corporation (ITC), National Investment Company of Iran, and Omid Investment Company recorded the highest volume of trade. The ITC also topped the rise in trade value among all listed firms.
Undervalued Shares
The broad wipeout at the TSE has been accompanied by the undervaluation of a large number of companies’ shares, including those of high-yielding-firms.
Professional investors usually don’t panic in such dismal trading days; instead, they keep tracking valuable shares, shoring up their portfolios, and, at the same time, observing the option of diversification.
Shaky decisions and price fluctuations have revised down sentiments, while fundamental analysts advise investors to garner shares on such trading days, preserving them for the time the economy shows signs of improvement.
Staying focused on a certain market but diversified in industries is a key to succeed.
Analysts strongly believe that investors should stay diversified across a variety of asset classes. By working closely with their financial advisor, they can help ensure that the portfolio is properly diversified and that their financial plan supports their long-term goals, time horizon and tolerance for risk, though diversification does not guarantee a profit or protect against loss.
