Reporting "Asre Bazar", The All-Share Index has been recording minor positive returns in the last 7 trading sessions, totaling 1.3%. This week, the Automotive sector (+4.0%) continued last week’s gain with higher growth, recording a 6.7% increase in two weeks. However, the market leader was the Machinery & Equipment sector (+4.1%), which was influenced by positive performances of Sarma Afarin Co. (SRMA +10.39%) and Butane Group (BOTA +9.29%). The weakest major sector was Ceramic & Tiles (-2.8%). It was affected mostly by Sina Tile Co. (SINA -6.17%) and Alvand Tile Co. (ALVN -5.32%). This week, the Transportation & Logistic sector (+2.9%) surprised investors by recording the highest gain since late February 2016. Tidewater Middle East Co. (TAYD +8.89%) was the sector’s top performer.
From a Technical Analysis perspective, the All-Share Index has reduced its difference with the 50 day EMA to 1%. Since April 2016, the All-Share Index’s measure has been lower than the 50 day EMA, while its recent increases have narrowed the gap. The index has already left behind the support level at 75,000 by turning its direction from the current low at 75,863. To start an uptrend, the All-Share Index should pass over 78,200 first. The index needs to continue its recent upward moves to make the indicators provide positive signals.
The TSE30 index, the index of the thirty largest companies by market capitalization, went up by 0.6% as well to close at 3,158. The top 30s index recorded a slower growth pace as it had gained 1% in the previous week. This week, the highest increase among the top 30 stocks was marked by Parsian Bank (BPAR +4.4%) and Iran Khodro (IKCO +4.36%). The weakest were National Iranian Copper Industries Co. (MSMI -4.54%) and also Jam Petrochemical (PJMZ -3.13%), which fell the most compared to the other top 30 stocks.
Reviewing the TSE’s trade volume shows a slight change compared to the week before. The Average Daily Trade Volume (ADTV) has slipped by almost 6% to USD 64 million. The most popular shares were SAIPA Investment Co. (SSAP +3.93%), Azarab Industries Co. (AZAB +0.49%) and Iran Khodro (IKCO +4.36%) recording the highest traded values with USD 16, USD 13 and USD 11 million worth of trades respectively.
In contrast with the TSE’s main index, Iran Fara Bourse Overall Index recorded a slight negative return this week. IFB Overall Index closed at 817, 0.2% lower than the previous week. The highest weekly increase among the shares listed on IFB was recorded by Rail Pardaz System Co. (HRLZ +12.72%); the company has gone public recently. Middle East Mines & Mineral Co. (KHMZ -9.43%) fell the most, recording the weakest performance on IFB.
In the FX market, the Iranian Rial dropped versus major currencies. The Central Bank of Iran quoted the official rate of US Dollar at 30,499, 0.3% higher than the previous week. In the free market, each USD was exchanged for IRR 34,544, recording 0.6% weekly growth. The official rate of Euro was reduced by 0.1% as CBI announced it at IRR 34,054. But, the free market rate of EURIRR went up by 0.6% to 39,066. The official rate of British Pound Sterling rose by 1.2% to IRR 44,806, while the free market rate reached IRR 50,800 recording a 1.8% weekly increase.
The Central Bank of Iran released its latest inflation report on Tuesday. According to the CBI, the country’s Consumer Price Index has increased by 0.9% during the second month of the Iranian Calendar Year (April/May 2016). The previous MoM inflation read had shown 0.5% growth in March/April 2016. Similar to the previous month, the Leisure group has experienced lower prices, dropping by 0.3% on a monthly basis. The highest MoM increase has been recorded in the group of Tobacco showing a growth of 10.9%. The year on year comparison also shows the inflation rate has dropped by 0.1% reaching 7.3%. The highest YoY growth has been witnessed in the education group, which has surged by 22.2%. The lowest record belongs to YoY change of household goods & services with 4.3% increase. During the last six months the YoY inflation of Iran has been lower than 10%, following a downward trend. In summer of 2013, the country’s inflation rate had been reported at 45%. Since then and with the coming to office of Hassan Rouhani as the new Iranian president, the CBI and the new administration have been successful in controlling the inflation rate despite the government’s reduced foreign income. The government’s income from exporting crude oil was 20% less than the initial projections in the previous Iranian Calendar Year. Nevertheless, some analysts believe that the low inflation rate is also due to reduced economic activity in the country as the economy is stagnating and many industries are facing major challenges. At the moment, annual bank deposits also earn an interest of 18%, while the inflation rate has been following a downward trend. It is not clear when the Iranian Money and Credit Council will react to the wide gap between interest and inflation rates and make the necessary adjustments to the interest rates.