Gmail - Iran Weekly Market Report - 28 January 2016:
"Summary
The Tehran Stock Exchange experienced solid growth in the last week of January 2016. This week, the TSE All-Share Index recorded positive returns for five days in a row and recorded an increase of 6.68%, closing at 71,011. It is the highest the index has closed at since December 2014. On Wednesday, the All-Share Index rose to 71,492, but then receded by 0.68% in the final hours, closing at 71,011. The positive performance of the TSE’s main index was supported by most sectors this week. Among the major sectors, Automotive (+15.06%), Metallic Ore (+14.28%) and Base Metals (+9.67%) were the main movers behind TEDPIX’s weekly surge. Transportation & Logistics (-1.23%) was the only major sector which negatively affected the index. Over the last two weeks, optimism about the Automotive sector has resulted in extraordinary growth for auto companies’ shares, while Banks, the other sector affected by the sanctions, experienced lower growth this week, increasing by 8.86%. Investors placed higher values on mining and metals companies this week, following slight improvements in the prices of some global commodities. Esfahan Mobarakeh Steel Co. (FOLD +11.25%) was one of the shares that exerted the greatest influence on the TSE All-Share Index, even though the company’s projected income for the current financial year projects a sharp drop from the previous year. In an audited report published on January 19, 2016, FOLD reduced its projected net income for the financial year ending March 19, 2016 by 8% to IRR 9,422 billion (approx. USD 262 million). This is 60% lower than the previous year. The engineering company, Mapna Group (MPAN 10.3%), was also one of the other top influencers on the TSE’s main index. The unaudited 2Q reports of the company show an increase of 18% in net income, reaching IRR 2,095 billion (approx. USD 58 million). The company’s projected net income for the year ending on March 19, 2016 is IRR 6,220 billion (IRR 173 million), 3% higher than the last year.
A technical analysis of this week’s performance highlights that the TSE All-Share Index decisively surpassed the resistance level of 70,000, but dropped slightly after getting close to 71,500. The poor return of the index on Wednesday might mark the beginning of a slower pace of growth, though market sentiment remains bullish and the current uptrend has been supported by strong market volume. The TEDPIX is already above the 50 day EMA by around 11%, reflecting its quick surge. If the current surge continues, the index is likely to experience resistance at 76,500, a level which blocked the index’s uptrend in November 2014. Technical analysis indicators suggest there is potential for further growth, though the Money Flow Index and RSI have been signaling an overbought status for over a week. If the index falls below the 70,000 level, the current outlook could change.
The index of the thirty largest companies by market capitalization, the TSE30 index, recorded a 7.75% increase, closing at 3,036. Iran Khodro (IKCO +19.1%) experienced the highest gain among the top 30s. There is positive sentiment regarding auto companies’ ability to upscale production and widen their product range by cooperating with international auto companies. Iran Khodro and Peugeot are currently in negotiations to develop a product line of Peugeot cars inside Iran via a joint venture partnership. Peugeot cars are one of the dominant brands inside Iran with 36% of market share, assembled through IKCO’s factories. The weakest performance in the TSE30 index was recorded by Pardis Petrochemical Co. (PRDZ +0.81%). On Sunday, the company published unaudited projections for the year ending September 21, 2016. PRDZ expects to earn IRR 9,966 billion (approx. USD 278 million) in net profits, showing almost no change from last year’s actual net earnings.
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