Equities responded to the "Implementation Day" of the historic nuclear deal on Saturday, with their largest gain since March, while all major currencies retreated against the rial to two-month lows.
The International Atomic Energy Agency was expected to confirm on Saturday that Iran has scaled back its nuclear activities in line with the agreement, paving the way for the removal of western sanctions.
Most importantly, the resumption of financial ties with the world community will reduce commercial costs and give Iranian companies a chance to export their products. Petrochemical products, which make up half of Iran's private sector exports, are expected to profit the most from sanctions relief, though their record low crude prices erode some of the gains.
Sheer enthusiasm about the imminent lifting of sanctions drove Tehran Stock Exchange's heavyweights up, on the exchange's fourth day of gains in a row.
TSE's main index, TEDEPIX, jumped 2.12% to 64,860.90 points—its highest since August 23 by the market's close, as banks and financial services, petrochemicals, shipping and telecoms led the rise, according to the exchange's website.
"The rally has good momentum. Most of the demand came from non-institutional investors while institutional investors, battered by the market's two years of decline, were sellers. I think the market will continue its uptrend, unless new problems surface," Seyed Ali Khosroshahi, Amin Investment Bank's senior bonds analyst, told Financial Tribune.
The main index of Iran's more nimble over-the-counter market, Iran Fara Bourse, which has been shadowing the TSE, surged 2.82% to a four-month high of 731.32 points by Saturday's close, as its petrochemical-heavy portfolio gained, IFB data show.
"The change is real, though some shares are gaining purely on excitement. However, with every hike comes a drop. I think we will see market corrections in a week or two," Azadeh Ahoopai, a private wealth manager at Kardan Investment Bank, told Financial Tribune.
"Some companies, like industrial holding MAPNA and shipping firms, will soon gain access to foreign financing and have good fundamentals, but have yet to catch up with the rally. Others will need some downticks," she added.
Other analysts had a more solemn tone.
"Things look good in the short run. While the hype around the nuclear deal lasts, markets will continue moving higher. However, we expect fairly negative yearend earnings reports [after the start of the new Iranian year in March], which will hurt equities," Reza Qahremani, Maskan Investment Bank's head of asset management, told us in a phone interview.
> Rial Goes Higher
The foreign exchange market showed a different response. The rial strengthened to a two-month high against a basket of major currencies, data compiled by Financial Tribune show.
The US dollar fell 1.25% to a two-month low of 36,000 rials by 1212 GMT on Saturday, as foreign exchange traders cashed out of the market. The greenback's sixth-day fall knocked it off a three-year high of 37,230 rials, reached on January 10. The US currency tested the 36,000 mark's resistance in late trade, but rebounded.
"The dollar's drop is not significant. Pressure will ease on it, especially with oil going so low. The central bank may cushion the fall," Seyyed Jalil Motahari, owner of Darik Coin Exchange, said on the phone.
The euro and the pound had an even harder time, tumbling 1.53% and 1.74% respectively to 39,300 rials and 51,800 rials, respectively–both at two-month lows.
> TSE, IFB Daily Report
Tehran Stock Exchange’s main index TEDPIX skyrocketed 1,344 points or 2.12% to settle Saturday trade at 64,860.9.
More than 1.18 billion shares valued at $61.1 million changed hands, as daily trade value shrank nearly 30% compared to Wednesday’s figures.
The Price Index rose 519.50 points or 2.12% to end at 25,070.6.
The First Market Index was up 998.10 points or 2.29% to reach 44,661.
The Second Market Index gained 2,605.20 points or 1.82% to register 146,087.2.
The Industry Index added 1,159.90 points or 2.23% to close at 53,258.7.
The Free Float Index jumped 1,539.70 points or 2.18% to hit 72,283.
The TSE 30 Index was up 65.30 points or 2.43% to record 2,750.6.
And the TSE 50 Index surged 56.60 points or 2.21% to post 2.623.1.
Close to 75% of the listed companies worked in favor of the benchmark.
Persian Oil and Gas Development Company, with a P/E ratio of 6 and 131.78 points, provided the biggest boost to TEDPIX, followed closely by Iran Telecommunications Company and Tamin Oil, Gas and Petrochemical Investment Company with 115.74 and 110.72 points respectively.
Golgohar Mining and Industrial Company was the biggest market laggard with 13.02 points, followed by Persian Gulf Petrochemical Industries Company and Post Bank of Iran with 11.79 and 2.44 points respectively.
Meanwhile, Iran Fara Bourse’s all-share index surged 20.08 points or 2.82% to end at 731.32.
More than 275 million securities were traded in 29,000 transactions valued at $146.7 million, indicating a more than 500% rise in daily trade value and recording IFB’s highest trade value since September 2015.
Iranian Petrochemical Investment Company saw the highest trade volume and value of the day with the transaction of 31 million shares worth $1.4 million.
Khazar Shipping Lines Company, Zagros Petrochemical Company and Shiraz Oil Refining Company recorded the highest rise in shares’ value.
Shirvan Sugar Company, Minoo Food Company and Chaharmahal Sugar Company saw the highest decline.
Iranian Petrochemical Investment Company, Tehran Oil Refining Company and Tuka Paint Company were also on investors’ radar.
Etemad Fund, with the transaction of 1.5 million shares registered the highest trade volume amid listed exchange-traded funds. Furthermore, 500,000 participation bonds of Iran Telecommunications Company were sold out.
