TEHRAN – Stock market analyst, Hossein Ahmadi, believes that since the prices at the stock market have not increased in line with the inflation, the market is expected to start an upward trend in the near future.

Considering the increase in foreign currency rates and inflation, the stock market index can grow to catch up, Ahmadi told IRNA on Monday.

He pointed to the recent fluctuations of the stock market and added: "In the past few weeks, we have seen some support from the government to improve the capital market and reduce the fluctuations of this market, which have been able to be effective in changing the direction of the stock market index to some extent."

Pointing out the positive features of the government’s support package for the stock market, Ahmadi noted: “Insuring the shares of real persons, supporting the market stabilization fund, and the establishment of the capital guarantee fund were among the measures that showed the Stock Exchange Organization (SEO) has not left the shareholders alone.”

“Over the past few weeks, we have seen the positive effect of the Stock Exchange Organization's measures, and in the last two weeks, we have experienced a good situation in the market compared to the last few months, but we cannot say that the market transactions have been entirely positive during this period,” he said.

This capital market expert emphasized that the analysis of the market situation from a technical point of view indicates the stabilization of the market index in the channel of 1.4 million points, adding: “If the stock market index stabilizes in this channel for a few days, it is expected to grow to about 1.7 million points.”

In late October, SEO unveiled a comprehensive support package to encourage activities in the capital market as shareholders were getting reluctant to invest in the market.

One of the major measures considered in this package was the insurance of shareholders’ capital and dividends over the next year.

Insuring the shares of real entities up to one billion rials (about $2,600) per person, issuing subordinated warrants on shares of fixed income funds up to 400 trillion rials (about $1.04 billion), injecting new resources into the market by sovereign funds to buy shares, depositing up to 50 trillion rials (about $130 million) of the resources approved in the national budget bill for the Capital Market Development and Stabilization Fund, as well as direct and continuous coordination, supervision and monitoring of the legal entities active in the capital market, including companies and semi-governmental financial institutions, pension funds and military institutions were among the measures considered in the mentioned support package.

The package also stressed cooperation between the Central Bank of Iran (CBI) and the Ministry of Finance and Economic Affairs to manage the interest rates.

Increasing SEO’s direct investment in Capital Market Development and Stabilization Fund, limiting the activities of marketers, and suspending the underwriting of securities and initial offerings until further notice were also among the issues considered in SEO’s support package.

Following this support package, the market started a modest upward trend in November which continued for almost a week.

TEDPIX, the main index of Tehran Stock Exchange (TSE) rose 131,000 points (10.21 percent) to 1.414 million points in the Iranian calendar week ended on November 11.

As reported, it was the highest weekly rise during the current Iranian calendar year (began on March 21).

Back in February, the government's economic coordination headquarters had also unveiled a support package for the capital market, which included measures such as reducing the price of petrochemical feed, reducing taxes on manufacturing companies, defining new regulations for the mining sector, increasing the capital of the Stock Market Stabilization Fund, controlling the release of government bonds, and determining the exchange rate of the banks; but this package, despite the temporary positive effects, was not able to change the general trend of the market and prevent the continuous fall of the stock prices.

EF/MA