Investigating the future of the banking group’s shares in case of revival of JCPOA / Will banks prepare for flight?

Bazar Saham Banking Group has a relative advantage with a P/E of about 6.02 compared to the Tehran Stock Exchange, which is currently moving with a P/E of nearly 9.7. But what effect will the revival of JCPOA have on the country’s banking industry and in which direction will the shares of this group move? In this report, two scenarios for the technical chart of banks and credit institutions have been examined.

According to Tejarat News, sanctions have had an undeniable impact on the country’s economy during the past 20 years. One of the most important sectors that have suffered the most from the sanctions is the country’s banking industry. Experts believe that most of the current economic problems have occurred as a result of banking sanctions and their subsequent impact on the country’s economy.

After the events of the past weeks in Iran’s diplomatic atmosphere, speculations regarding the revival of the JCPOA agreement between Iran and the West have increased. From the exchange of prisoners between Iran and Belgium to the visit of the Sultan of Oman to Tehran, the signs indicate that the option of reviving the JCPOA and the agreement between the parties has once again been placed on the table of Western and domestic policymakers.

The impact of revitalization of the JCPOA on the banking industry

In order to understand the impact of revitalization of JCPOA on the country’s banking industry and to predict the future of this group’s shares in the Tehran Stock Exchange, one must first know how the sanctions have crippled the banks’ profitability.

The first consequence of imposing sanctions against Iranian banks was the complete cut off of access to foreign currency reserves in foreign banks. This factor itself has played an important role in the series of consecutive currency shocks and jumps of the American banknote. On the other hand, with the restriction of foreign exchange operations of banks due to sanctions, the generation of non-interest income of banks became much more limited than before.

The widespread disharmony of banks is the third case where traces of sanctions can be found. Along with the chronic disease of inflation in the heart of the country’s economy, there are rarely people who deposit their capital in banks; Because the real interest rate is negative in inflation conditions. On the other hand, in such a situation, the demand for loans increases sharply. The combination of these two events together will lead to severe disharmony among banks.
Therefore, the option of revitalizing the JCPOA and lifting the sanctions will gradually increase the profitability of banks with the return of foreign exchange reserves and the reduction of banks’ restrictions.

Technical analysis of the index of banks and credit institutions

With the breaking of the control ceiling of the long-term downward trend at the end of January of last year, the technical chart of the banking industry index has shown a green light to the upward outlook for this group. In the middle of February last year, after the correction of the market, a good buying opportunity was provided in this group, which resulted in an 85% yield for the shareholders during the three months of February, March and April.

Two technical scenarios of the banking group index

A technical look at the chart of this index shows that the trend of the banking group has returned to its green days before repeating the size of the correction in February. The previous rising wave in the index of banks and credit institutions showed that it did not have the strength to reach and cross the previous ceiling. This weakness in crossing the previous ceiling was enough for the shareholders to realize that the banking group needs more time to return to the bullish demand days.
In the first scenario, if in the next few working days we see that the banking group index succeeds in crossing and stabilizing above the ceiling of 580,000 units, then Hagopian’s situation is confirmed and targets much higher than the Andrews fork ceiling are available to Capital Market Banking Group. will be placed

But in the pessimistic scenario, due to the existence of a very important MPL (Multi Pivot Line) in the range of 470,000 units and its elasticity according to Andrews rules, we should wait for the middle line of the drawn fork to be touched to end the correction process.