The benchmark of Tehran Stock Exchange closed 6.8% higher gaining 90,000 points to reach the critical 1.4 million points -- recording the best trading week since the beginning of current fiscal year on March 21, according to the Persian-language economic website, Eqtesad News.
The upswing came as stocks recover from a long bearish trend that dominated the bourse for almost a year. The TSE’s benchmark, TEDPIX, gained about 300% in first five months of previous fiscal year ending August 2020, after which the bubble burst and the benchmark gave up half of the gains.
Stock market rally in recent weeks is driven by a combination of factors, notably inflow of fresh liquidity by retail investors and cautious optimism arising from the change of government.
Among the main victims of previous market crash, retail investors appear hopeful to compensate part of their losses and have asserted their presence in the market in recent days. As per market data, value of trade by retail investors on Wednesday reached 76.92 trillion rials ($307 million), the highest since Feb 15.
Observers say stock traders have welcomed the change of guard in Tehran as newly-elected President Ebrahim Raisi pledged to support the stock market in his inauguration speech on Thursday.
Despite the general optimism, not all stock categories enjoyed the uptrend. As such, the TSE recently has been mainly boosted by large caps, including commodity stocks in petrochemical, refinery, base metal and mineral companies.
Higher currency rates and increase in international commodity prices have kept demand high for export-oriented commodity stocks.
According to Bloomberg, The Bloomberg Commodity Spot Index, a basket of nearly two dozen raw materials, surged to a 10-year high this week and is rapidly closing in on the record set in 2011.
Brent crude, the global oil benchmark, has again surged above $75 a barrel, copper is headed back toward $10,000 a ton, European natural gas is at its highest ever for the summer season, and steel is changing hands at unprecedented levels.
Millions of retail traders were hit hard and many have lost more than 70% of their savings in the recent stock market recession in Tehran.
Many blame the former Rouhani administration for their misfortune and had often demanded it fulfill its promises to buttress the bourse.
Senior government officials have been strongly criticized for urging the public to buy shares in the past two years and assuring them that it is a safe and lucrative investment. The outcome of those repeated government and state entreaties was that swarms of small investors flooded the stock market in a short time with little or no financial knowledge about the nature of the bourse.
In its final days, the previous government tried but failed to prop up the market. In the latest measures in May, the Cabinet approved a package of ten measures to bolster the market.
Among other things, those measures involved giving permission to banks to increase their investment in stocks and borrowing from the National Development Fund of Iran, the sovereign wealth fund, to stimulate demand.