Iran’s stock market has been rallying in recent weeks and months, notching fresh all-time highs. The Tehran Stock Exchange (TSE) Index spiked by 0.07% to close at 278,674 points on Wednesday, its return was a whopping 55.9% according to the report posted on the TSE's website. The recovery is also in line with analysts’ estimates for the benchmark’s rise around 60% over the year, conducted and published by the economic Daily Donye-e-Eqtesad on July 16.

While traditionally parallel markets have the potential to attract idle money in the economy, they have not shown any signs of attractiveness for retail investors over the past few months. The gold, currency and housing markets currently do not enjoy a high profitability outlook for Iranian investors regarding their dramatic spike on the wake of rial depreciation in the previous year.

One point that should not be overlooked giving rise to the gauge’s record highs has been the sizeable change in the composition of bank deposits from longer-term to shorter-term investment horizons, according to the latest report from the central bank for the preceding Iranian calendar year. The stats for the money and quasi-money show that they hiked 46.5% and 19.6%, respectively, year over year. This increase was accelerated partly because of the rise in inflation and the inevitable lowering purchasing power of Iranian households, which were urged to keep their hard-earned savings at hand to spend on daily shopping requirements. Given the low amount of interest paid on long-term bank deposits — 15%, while inflation stood at 42.2% — the immediate availability of cash eased investment decisions for short-term deposit holders, a possibly decisive factor behind the bullish trend in the stock market.

Moreover, hard currency appreciation in the preceding year favorably impacted the TSE Index in two perhaps different stages benefiting domestic firms. First, its unprecedented spike in the course of the preceding year led to the government's decision to eliminate the subsidized dollar rate allocated to a large number of items being imported to a selective slew of essential goods. This move by the Iranian authorities enhanced the nominal sales of the heavy weight commodity-based companies listed on the TSE, constituting almost 58% of its market cap, by burgeoning their income margins. Second, rial devaluations culminated in rampant inflation, providing sufficient fuel for the smaller-cap firms to follow suit as their top-line and bottom-line margins started to jump. This urged investors to rush into buying their shares, pushing their relevant gauge higher and higher in the exchange market. The Equal-Weighted Index, the barometer applied to measure the performance of micro-sized listed firms, has yielded, astonishingly, about 133.3% from the beginning of the Iranian year through Aug. 28, strikingly surpassing the traditional benchmark.