On Saturday January 6, TEDPIX rose for eleventh continuous days. In the last week TEDPIX has the best performance in past 3 months with 1.5% increase. In this article we examine the reasons for this growth shortly.
Closing to implementation day of JCPOA (The nuclear Agreement between Iran and G3+3) is the first reason. A quick glance at the past shows that nuclear influential news always has proportional response in the market (for example See the response of TSE to Lausanne agreement). Many analysts believe that foreign capital inflow will be seen after the implementation day of JCPOA, which cause the price to rise because of demand amplification. There are many funds such as hedge funds, mutual funds, and specially funds which invest in emerging market is awaiting for JCPOA to implement to start investing in TSE.
Decrease in interbank interest rate is the second reason. Interbank interest rate decreased from 28% to 19% in past six months. Which signs bank interest rate is to rebate soon. Declining interest rate may cause capital movement between markets. Obviously capital will outgo from banks and TSE maybe a possible destination for the outgoing capitals. Interest rate decrease can also increase P/E ratio which is a good news for TSE. Interest rate decrement is also facilitate recession exit procedure, which is the most important problems of these days of Iran economy.
Technical looking to TEDPIX shows a bottom of 61,200 for the index. 61,200 is the 27-months historical low for TEDPIX. The recent rally started on 2015/12/26 when TEDPIX touched 61,354 as a new low. So TEDPIX forms a higher low that is a bullish sign in technical analysis. Technical indicators such as CCI and RSI show oversold levels. Besides RSI and MACD form a triple bullish divergence at weekly timeframe which is a strong bullish signal.
As a result we mentioned three reasons for market growth in the past 10 days. These reasons along with a 30% decline of TEDPIX in the last two years, and distance between prices and intrinsic values of TSE listed stocks lead to reduce the possibility of further decline in TEDPIX. Tracing the trading volume is the last pace. Average trading volume before this period was about 600-800 billion Rials which rises to almost 1,500 billion Rials in these days; another good signal for TSE growth. Although the above reasons we cannot claim that TSE is to growth certainly, so we must waiting for further signals to boost TEDPIX bullish movement.