The Tehran Stock Exchange witnessed a significant influx of liquidity on the last trading day of last week, Wednesday, October ١٥, reaching a remarkable figure of ٤,٤٢٩ billion tomans. This volume of new investment occurred while many analysts and investors had predictions about a market crash. However, trading data suggests that the reality of the market may contradict these predictions.
Increase in Demand and Market Boom
Since the beginning of this year, tens of thousands of billion tomans of new money have entered the stock market. The value of buy orders reached ١١ thousand billion tomans, while the value of sell orders was only ١١٤ billion tomans. Thus, the value of buy orders is about ٩٦ times that of sell orders, indicating a dominance of demand at this point in time.
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The purchasing power index is also around ٢, indicating that the per capita purchases of real investors are almost double their per capita sales. This is significant because the proximity of the ٣٠-day moving average of this index to this level indicates the continued strength of buyers in the market.
Growth of the Overall Index and Market Challenges
Since the beginning of the year ١٤٠٥, the overall stock index has grown by ١٢٥%. However, the dollar value of the market remains around ١٠٢ billion dollars. The main reason for this discrepancy lies in the rising dollar rate. With the increase in the exchange rate, the rial price increase of stocks does not necessarily lead to an increase in the dollar value of companies. This gap could serve as a basis for re-evaluating the attractiveness of stocks, although it does not alone prove the market's cheapness or guarantee continued growth.
In addition to liquidity flow, seven fundamental engines can also support the market; including the relative attractiveness of stocks after a recession period, the growth of rial revenues of export-oriented companies, the influx of accumulated liquidity, the increase in the replacement value of assets due to inflation, and government policies to strengthen the capital market. These factors together can help strengthen the market.
Upcoming Challenges and Market Analyses
The combination of these factors does not mean that the stock market is immune to price declines. However, in conditions where demand and liquidity flow support the market, predicting a widespread and imminent crash without evidence such as continuous outflows of money, dominance of supply, and weakening profitability of companies is not a complete analysis. A temporary price correction differs from a widespread market crash, and investors should analyze their assessments more carefully.
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