Economy, Business And Markets
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TSE Wobbles Amid Profit-Taking Pressure

TSE Wobbles Amid  Profit-Taking PressureTSE Wobbles Amid  Profit-Taking Pressure

Heavy profit-taking pressure coupled with lingering uncertainties surrounded the equity market and pushed stocks to experience a fresh downturn since November 15, wiping out a batch of gains made within the past two months.

Due to some political and economic concerns, the equity market failed to meet investors’ expectations, extending its broad losses, and leading investors to mull over heading to the rival markets, including gold and foreign currencies and even depositing their money in the banks.

The Tehran Stock Exchange (TSE)’s indices largely contributed to the dented benchmark’s plunge within the past three weeks, spurring anxiety among unsettled investors, even though everyone knew that there has not been any fundamental change toward the listed companies’ performance.

Market analysts claim that the extension of nuclear talks between Iran and the P5+1, and the sudden dramatic fall in oil prices were a bit of trigger, but once fear gripped investors, equities quickly sold off.

The TSE was witnessing series of lineups within the past 3 weeks, as investors aimed to take profit and escape the upcoming potential heavy losses. Given the information released by analysts, in some occasions, both individual and institutional investors have dragged the benchmark down by showing such emotional investing behavior.

As a matter of fact, tanking oil is likely to crimp the fiscal budget of some of the leading crude exporters, especially those economies that are heavily reliant on oil. But despite a high breakeven price for Iran’s crude, resistant economic policies along with revised fiscal budget for the upcoming year should have trimmed concerns.

According to the Financial Tribune database, almost all indices waxed and waned during last week’s sluggish trade, with the TSE gauge plunging almost 1.14 percent to settle at 71,043.

More than 3.15 billion shares valued 7.7 trillion rilas were traded at the equity market, to wrap up another negative trading week, after 72,458 traders recorded 254,740 transactions, SENA reported.

The benchmark retreat is an extension of recent profit- erasing trend at the TSE, with the average loss for investors exceeding 10 percent, ISNA reported.

Another week of dizzying price swings affected various stocks at the equity market, with high-yielding shares witnessing seesaw trades, mainly due to the reactionary manner of investors.

The TSE’s benchmark is at a striking distance from the 70,000-mark, a crucial level for all investors. As the TEDPIX is very close to the resistance zone, it is more likely to expect contribution from the market development fund, as well as from other related bodies, which can help the equity market to get back on track.

 Investors and Key Indicators

The investors are awaiting clarity regarding key indicators. This may largely contribute to the performance of important listed firms at the equity market, including refineries. The government is supposed to set the price for feedstock, which is seen as a long-run strategy.

In addition to refineries, petrochemicals are also waiting for the government’s decision. Due to the crude price freefall, the end selling price of petrochemical complexes will follow a downtrend, respectively. Moreover, they may not be able to take advantage of the foreign currencies’ fluctuations, like they did 2 years ago.

Listed companies’ performances are partly associated with the oil price, as they track that trend to choose measures to hedge over the price fluctuations.

The budget details and economic growth are other ambiguities felt by both the companies and the investors. Adding to these, the outcome of nuclear talks is significantly important. Before the extension of nuclear talks, a big group of investors were estimating a final accord, and that was the reason behind the unprecedented surge at the equity market.

Banking interest rates have always been a concern for stock market activists, as high rates grab shaky investors’ attention; those seeking to hedge their bets.

It is an undeniable fact that there is a correlation between inflation and interest rates. Due to recent downtrend in the oil market, it is more likely to see a surge in inflation, given that the administration fails to reduce the negative impact of falling oil prices on the economy. Moreover, the freefall is expected to result in currency depreciation.

The administration is seeking to weed out inflation. To ensure that, various policies shall be enforced to narrow speculations and trigger an uptrend at the equity market.    

It is more likely to see part of the current ambiguities fade within the upcoming weeks, leaving a positive impact on the TSE gauge.

Financialtribune.com