Economy, Business And Markets

Stock Market in Red as Shaky Sentiment Lingers

Stock Market in Red as Shaky Sentiment Lingers
Stock Market in Red as Shaky Sentiment Lingers

The Tehran Stock Exchange (TSE)’s overall index once again retreated at Saturday’s close to extend its massive losses incurred within the past few months, with all indices pushing the TEDPIX to the red territory.

According to TSE’s data, the benchmark pulled back 143.2 points or 0.21 percent to settle at 68,829.9, as ambiguities persist at the equity market.

Investors’ shaky sentiment and cloudy atmosphere of the economy have recently fueled selloffs at the equity market, with the benchmark breaking its resistance levels.

The first market index dropped 80.2 points or 0.16 percent to end at 50,837. The second market index plummeted 447.8 points or 0.33 percent to stand at 134,967.2. The free float index was down 102.7 points or 0.13 percent to finish at 78,874.6. The industry index fell 131.6 points or 0.23 percent to 57,748.7, and the blue chip index slipped 4 points or 0.13 percent to 3,091.6.

Trade volume dramatically declined compared to Wednesday’s trade, which was accompanied by a tangible decline in trade value. The Persian Gulf Petrochemical Industry Company (PGPIC) heavily weighed on the TEDPIX, and significantly caused the benchmark to retreat.

More than 301 million shares changed hands during Saturday’s trade, valued at 810 billion rials. The low level of trades underscores the ambiguities lingering at the TSE.

Iran Khodro topped the highest volume of trade. However, Mobarakeh Steel Company, and Telecommunication Company of Iran took the second and third place respectively.

According to our analysis, almost 63 percent of the listed companies ended in red as 32 percent ended in green, though they failed to revise the benchmark’s downtrend.

The current crude oil freefall keeps slashing expectations over the performance of petrochemical complexes, with the estimations portraying a downtrend in petrochemical’s earnings. As the prices in global petrochemical market recently extended their fall, concerns gripped unsettled investors, pushing them to get rid of petrochemicals shares.  Hence the PGPIC was the market laggard with almost 50 percent negative contribution to the TEDPIX.

It is unlikely to expect an upward trend at the equity market in the near future, given the fact that petrochemical complexes account for almost 40 percent of the equity market.

Falling crude is likely to cripple the fiscal budget to some extent as various industrial sectors are endangered, with government-sponsored construction projects subject to the highest risk.

It is hard to escape the conclusion that the listed firms are unlikely to outperform within a limping economy. Moreover, persistent ambiguities that have dominated the equity market are crucial laggards that drag down the TEDPIX.