Stocks Rise to Recoup Heavy Losses
Tehran Stock Exchange closed with tepid gains on Sunday, after the new round of nuclear negotiations between Iran and the P5+1 appeared to be making progress.
The TSE main index (TEDPIX) rebounded as it rose 100.3 points or 0.14 percent to end the trading day with a rally after more than 45 days of consecutive slump. The US has reportedly proposed new options to Iran in order to reach a 'comprehensive deal' over Tehran's nuclear program in due time, SENA reported. The new round of talks between Iran and the six world powers began on Friday at the United Nations headquarters in New York.
According to the TSE website, the main benchmarks gained on Sunday, bounding off some of the lows reached in the recent downward in the stock market.
The TSE indices contributed to the TEDPIX rally on Sunday, as the first market index was up 103.3 points or 0.2 percent to 52,550.8; the second market index inched up 15 points or 0.01 percent to end at 141,719. The free floating index, which weighs a lot to the equity market climbed 244 points or 0.3 to 80,457.5. The industry index edged up 85.9 or 0.14 percent to 60,670.3, and the blue chip index in line with other indices gained 6.4 points or 0.19 percent to 3,294.2.
More than 355 million shares changed hand throughout the upward trading day valued at 748 billion rials, making analysts conclude that, despite the market's badly-needed gains, the TSE is grappling with illiquidity and still cannot enjoy a high market depth -- a variable which is translated as the ability to sustain relatively large orders without impacting the price of the securities.
Iran Khodro topped the gainers table on Sunday and contributed a 23.59 percent uptick to the market gains. Golgohar Mining and Industrial Company, under the ticker symbol "KGL", as well as Chadormalu Mining and Industrial Company, under the ticker symbol "KCHAD", stood next by 8.35 and 7.15 percent growth in terms of trading value of their shares, respectively.
Contributors to Growth
There have been some pending factors presumed to be the market stimulators, potentially capable of shifting the negative trend of the market in the past six months. But these have not been successful in their mission.
At the same time, a number of measures have been taken to stimulate growth in the stock market, namely a cut in the banking interest rates, the government's plan of action to help the national economy step out of the recession, and a new bill tasking the Securities and Exchange Organization with boosting trade and profitability at the capital market.
While some suggest that all these efforts have failed to tackle the equity market challenges, market analysts believe that their impact on the capital market should be analyzed in the long run. To be precise, these analysts forecast that the government's new plans could bear fruit, if any, within the next six months.
The TSE is apparently looking for an actual stimulator, something that can dramatically influence the market's shaky investors to bring back their money to the trading floor. These contributors are as follows:
1. Nuclear Talks
Individual investors along with business owners are carefully following the latest developments in the nuclear talks as they are certain that a 'comprehensive deal' will drastically change the atmosphere of the capital market.
The initial report of possible progress in New York was enough to convince investors to look forward to brighter days for the economy.
2. EU Lifting CBI Embargo
A top European court on Thursday struck down restrictions imposed by the European Union against the Central Bank of Iran (CBI) on an alleged charge of circumventing US-led sanctions against Tehran.
The Court of Justice in Luxembourg ruled that the case against the Iranian central bank from January 2012 was based on confidential evidence from one unidentified member state, against which Tehran could not mount a defense, FT reported.
The imposed sanctions on the CBI have been more than enough to endanger the domestic industries. The newly released announcement, thus, has been a big relief for them.
3. Listed Firms' 6-Month Report
Companies in the TSE are about to reveal their financial reports, which will enhance the investors' ability to predict more accurately the fate of their investments in the second half of the year. On the other hand, it will seem reasonable to predict more upbeat economic news over the course of next six months, as the national economy's exit from recession has encouraged top officials to project a two percent GDP growth by next March.
On par with the slow but steady economic growth, more transparency is expected in the equity market. A practical steps have been taken towards reaching a comprehensive nuclear deal, the prospect of the economy would become brighter.
The situation looks headed toward stability, which can increase collaboration between Iranian and foreign companies. Iran is regarded as one the world's largest emerging markets.