Stock market prediction in the fourth week of Mehr 1405 / will the rise of the stock market slow down?

The Tehran Stock Exchange is facing a new test next week to continue its ascent. Where the relative adjustment of the exchange rate and the possibility of profit recognition can reduce the growth momentum of the indices. However, the influx of liquidity and continued demand has kept the possibility of new ceilings alive. The stock market prediction post in the fourth week of Mehr 1405 / Will the rise of the stock market slow down? It first appeared in Safir Arjan.

According to Ambassador Arjan, the Tehran Stock Exchange went through a volatile path in the week ending on Wednesday, October 22, 1405. At the beginning of the week, BZR was faced with the dominance of sellers and the heavy outflow of real money, but from Monday, the trading table returned and the demand was again on the side of buying shares. Finally, the main indices of the stock market ended the week with a growth of more than 3%, and the net cash flow also remained positive.

The total index of the stock market, which started the week at the level of 8 million and 131 thousand units, reached 8 million and 425 thousand and 725 units at the end of Wednesday trading. In this way, the main index of the market increased by 294,725 units during the week and recorded a return of 3.63%.

Equal weight index also increased from 2 million 150 thousand units to 2 million 225 thousand 816 units. This index experienced a growth of 3.53% with an increase of 75,816 units. The closeness of the returns of the two indices shows that last week's upward wave was not limited to only a few large companies and index makers, and a significant part of smaller symbols also played a role in improving the trading environment.

However, the path of the market was not the same on all days of the week. On Sunday, October 19, the sellers had the upper hand and both the total and equal weight indices fell; But in the following days, especially on Tuesday, the demand got stronger and the market was able to overcome some of the doubts at the beginning of the week.

Historical record of transactions on the day of the dominance of sellers

One of the highlights of last week's trading was the historical record of trading value on a day when the market faced selling pressure. On Sunday, the value of transactions reached 72,869 billion tomans and a new historical record was recorded.

Also, cash flow was one of the most important factors explaining the fluctuations of the stock market last week. In total, about 5 thousand 841 billion tomans of net money entered stocks, preemptive rights and equity funds; However, this number hides significant daily changes in its heart.

Why is there a possibility of slowing down the growth of the stock market?

Despite last week's positive performance, we cannot expect that the stock market will necessarily repeat the same rate of growth and record breaking events next week. The relative adjustment of the exchange rate, the effect of part of the positive news of the companies on the stock price, and the increase in the probability of profit recognition after the recent growth, are some of the factors that can make the behavior of traders more cautious.

In the past weeks, the exchange rate has been one of the important drivers of inflationary expectations and demand in the stock market. The growth of the dollar is usually accompanied by increased expectations about the rial income of export-oriented companies and the value of the assets of the companies, and it can attract the attention of investors towards stocks. On the other hand, the adjustment of the exchange rate may reduce some of these expectations and reduce the intensity of demand.

Experts believe that the dollar is still one of the most important drivers of the stock market, and the eyes of many market participants are focused on the direction of the exchange rate. On the other hand, the performance of listed companies should also be examined along with macro variables; Because financial reports alone and without a significant change in profitability outlook or economic expectations, may not have enough power to create a new wave of demand.

Another issue is that part of the positive news of the companies has already been reflected in the stock price. In such a situation, the release of similar information may no longer encourage buyers to enter as strongly as before. Therefore, even if the overall market trend remains bullish, more volatile trades and slower growth are likely to follow.

Forecast of the stock market in the fourth week of Mehr 1405

Declining growth momentum should not be equated with certainty of market decline. The stock market showed last week that despite heavy selling pressure in a day, the return of liquidity can change the direction of trading. Therefore, the direction of the next week depends above all on the stability of the demand, the exchange rate situation and the ability of the market to attract supplies.

In the cautious scenario, the market enters a stage of fluctuation and rest after the growth of about 3.6% of the main indices. In this case, traders may recognize a part of their profit and the indices may experience more limited growth in addition to daily fluctuations or may be accompanied by a drop at times.

On the other hand, if real money continues to flow in and the buying queues in the affected groups are maintained, there is still a possibility of new ceilings being recorded. High transaction values can also help the market attract new supply; However, the mere high value of transactions is not enough to confirm the continuation of the rise, and the direction of liquidity flow and the spread of positive symbols should also be considered.

The two-day holiday after the end of trading on Wednesday may also have influenced the decision of some investors to hold shares. Some traders prefer to liquidate part of their assets or move to less risky instruments to reduce the risk of the holiday period. However, the behavior of a trading day alone cannot determine the direction of the post-holiday market.