Stock investors at the Nigerian bourse, particularly the bargain-hunters look set to leverage on equities prices which recently neared three-year lows as their search for appropriate re-entry spot intensifies ahead of year-end.
Though, many schools of thought within the market favour a December rally, others still say the market remains less impressive to anticipate short-term rally going by Nigeria’s macros which are seen impacting negatively on stocks.
“We anticipate a mix of bargain hunting and profit taking,” according to analysts at Cowry Asset Management Limited.
The local bourse had reversed the bearish momentum seen in previous weeks as the bulls took control in the last two trading sessions of last week.
Last week, the Nigerian Stock Exchange (NSE) All Share Index (ASI) gained by 0.05 percent to 27,631.05points, while market capitalisation added N4.68billion to close at N9.5trillion.
“As the year gradually comes to an end, activities may begin to wind down in the Nigerian Bourse with market activities tilting more to the sell-side this week”, said market analysts at Lagos-based Dunn Loren Merrifield.
The analysts recalled that the stock market recorded mixed performance even as equities remained under selling pressure earlier last week, “while bargain-hunting buoyed the market in the latter part of the week given that many – value and growth stocks- currently trade at historical lows.”
“We believe that the current mood lacks the impetus to drive sustained market gains, given the current macro-economic environment and prevailing investors’ sentiments,” said research analysts at Meristem.
“We advise investors to trade with caution in the coming week, especially in the light of current market sentiments. We emphasize the need for investors to hold a long term view while trading in equities that are fundamentally justified, as we anticipate that market sentiments will continue to dictate the performance of the market in the short term”, the analysts further stated.
“Market sentiment remained weak as sell bias ensued across the market. The last trading week saw the benchmark index hit a 3-year low of 27,289.89 points suggesting the market is possibly at, or near its bottom.
“At these levels, bargain hunting is expected to drive prices higher in the short term. However, current macro backdrop continues to engender weak appetite for Naira assets with foreign investors staying largely on the sidelines, even as domestic apathy towards equities lingers. On balance, we expect to see a technical bounce as the festive season approaches, though we caution that gains would pare given the absence of near term sustainable trigger”, said research analysts at United Capital plc.
“From a technical standpoint, bargain-hunting is expected to drive prices higher in the short term. Furthermore, one can posit from the gains in the early days of the month that a December rally might be in the offing,” the analysts had noted in their investment view for this week.
Iheanyi Nwachukwu
