Stock market weekly forecast / decline in the market continues?
According to Tejarat News, in the last week, the total index of the stock market dropped by 0.8% and reached the level of 1,490,000 units. The total equal weight index also reached the level of 407 thousand 12 units with a decrease of 2.7 percent. On the other hand, the total OTC index experienced a decrease of 1.6 percent.
Sara Fallah, a capital market expert, said in a conversation with Tejarat News: The third week of July was a very cold week for the capital market. A record low for the value of retail stocks in the past four months occurred this week. On the other hand, it was evident that real estates were leaving the market, and we saw very little purchase of legal estates in the market.
He continued: Most traders are looking for sales and exit from the beginning of the morning until noon. If someone wants to buy, they can easily make their purchase.
This capital market expert stated: One of the challenges of this week was the rumor of increasing bank profit. Bank interest has always been a competitor of the capital market. However, considering the inflation that is likely to be above 50% this year, the real profit from risk-free investment is negative. In fact, even if a person gets 20% fixed interest. Again, he loses 30% in total and his purchasing power decreases. This figure is only the nominal profit, not the real profit.
The effect of bank interest on the market
Fallah explained: Of course, the psychological effects of the increase in bank profit are greater than its real effects for the capital market. Especially when the head of the central bank is someone from the heart of the capital market.
He continued: Another important point that many market participants expressed their objection to this week was the total index issue. Total index is a standard index for all stock markets in the world. We cannot say that this index is wrong. But the main point is how to use it. Can the total index be a means of correct evaluation of the entire market or portfolio of shareholders? This is definitely not the case, and for this reason complementary indicators are created and used. Like the equal weight index, other indices can be designed to more accurately express the status of the shareholders’ portfolio.
This capital market expert explained: If someone intends to have a return like the total index, he should plan his portfolio based on the formula of the total index. The fact that the government spokesperson proudly states that the total index has grown by 10% and is stable in the market, and also states this as a tool to measure the efficiency of most shareholders, is wrong, and the main objection should be to the way the total index is used, not its formula. .
Referring to the news affecting the stock market, he said: One was the block pricing of cars, which received good news about pricing at the Vesapa Assembly. We also saw a new record of gross margin in the range of 17%, which was a new record in the last 10 years. Of course, this news did not have a psychological effect on the market.
Stock market forecast next week
Fallah, predicting next week’s transactions, said: In these days of market stagnation, most of the attention is focused on DPS shares. It means stocks that have good profits and distribute a good percentage. But some are moving towards small-caps with accumulated float. Of course, most of these shares are in the basic market and their risk is higher.
He continued: One of the most important and influential news in the coming week is the US inflation rate. If the inflation is high, the contractionary policies of the Federal Reserve will continue. This issue will have a negative impact on the commodity market, and as a result, the Iranian stock market and especially dollar-denominated companies will have a negative impact. But if the announced inflation is lower than the expected and forecasted inflation, it can improve the conditions for commodities.
This capital market expert said: The news of the approval of the Supreme Council of the Stock Exchange to offer cars in the Commodity Exchange under the supervision of the Ministry of Security can be a good stimulus for the car group. If block assignment pricing is determined, it can be another driver for the movement of this group.
Technical index of total and equal weight
Fallah went on to explain: This week’s total psychological support index lost one million and 500 thousand units. The RSI and MFI indicators are near the oversold level, which shows the strong superiority of the sellers over the buyers. Currently, the total index is near the minor support of 1,470,000 units, but the main target we have for the total index is the range of 1,450,000 units.
This stock market analyst stated: This week was a very difficult period for the equal weight index. It lost the important support of the range of 420,000 units. Indicators all show bearish pressure. Currently, there are no signs of a reversal of the trend, and we can consider the first support of the equal weight index to be the range of 400,000 units. This number is static support and corresponds to the 38% Fibonacci level.
Does the balance index change?
Fallah said: In this chart, the positive trend indicates the superiority of small and medium market shares over large shares and vice versa. This trend has now reached static support, so we expect a slight reaction in this area.
He said: We expect a negative trend for the market as a whole next week, and we will witness a downward trend in both large and small stocks.
Analysis of indicators
This capital market expert added: We are witnessing a medium-term downward trend in the overall index. The peaks and valleys are one after the other at a lower level. RSI and MFI both show the superiority of selling power over buying power. Of course, this week the index showed a positive reaction to the range of psychological support of one million and 500 thousand units. But due to the strong downward step, it is further predicted that the index will have a correction of 1 million and 450 thousand units.
He explained: From the point of view of Ichimoku, the total index shows the position of the Tenkansen Kijonsen and the price of the downward trend. The price had a pullback after entering the Cuomo Cloud range, but when the price hits the Tenkansen, we expect the correction to continue to the bottom of the Cuomo Cloud range, i.e., the range of 1450,000 units.
Fallah said: Fortunately, the equal weight index has maintained its important support of 420,000 units and has shown a positive reaction to it. Although the dominant trend shows correction, RSI and MFI indicators are in neutral range. This issue shows the equality of buying and selling power. It seems that a small news and a spark of hope can be the end of the correction for Shahs of equal weight. But if the market continues to be in doubt and despair, we expect correction to the range of 400,000 units, which is also the 38% Fibonacci support range.
Finally, referring to the ratio of the total index and equal weight, he said: the ratio of the total index to the equal weight index shows the superiority of small and medium shares of the market compared to large shares. Therefore, for the next week, we predict that the market will have a negative and close to balanced return, and the return of small and medium shares of the market will be better than large shares.
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