Although, many investors expect the release of more impressive corporate earnings to attract stock buyers, the sentiment in the market is changing as recent atmosphere of profit-taking showcases pendulum swinging in favour of the bears.
At the beginning of trading this week, Nigerian stocks fell most in a month in a recent sell-off elicited by investors weighing of risks ahead of next week’s elections.
Considering the already tensed atmosphere, analysts had expected that as the elections approach, investors will get cautious and pull out – a major reason for recent bear reign at the Nigerian Stock Exchange (NSE).
This is in addition to investors’ perceived rising risk on Nigerian securities driven by falling price of crude oil. Brent crude oil prices reversed most of their early gains to steady around $54 per barrel as high ongoing oversupply drags on the market.
In their investment outlook, research analysts at Meristem expect the stock market to close marginally negative this week.
According to them, “despite the profit-taking seen in the week, we expect that there might be a level of resurgence in the market on some trading days in the coming week, as we expect a few companies may release favourable earnings results partnered by attractive dividends. However, given the impending elections and the uncertainties which are set to accompany same, we also expect cautious trading by investors.”
“This week, we expect to see a mix of profit-taking and bargain hunting as more positive corporate actions are announced,” said investment analysts at Lagos-based Cowry Asset Management Limited.
“We expect current trend to be reversed on the back of investors interest in juicy banking stocks,” according to economic intelligence team at Access Bank plc.
“The market is expected to trade sideways this week. Although current technical readings still show modest upside, we expect continued profit booking to moderate gains to the bears’ side,” said research analysts at Lagos-based United Capital plc.
Last week, the stock market recorded a mix of bargain hunting and profit-taking that dominated the market towards end of the week in review. While the bull-run was driven by investors’ reaction to impressive results by tier-1 banks – GTBank and Zenith Bank – the rally could not extend into this week as investors remained in their profit booking mood.
As a result, the NSE All-Share Index (ASI) and market capitalisation depreciated by 1.06 percent and 1.05 percent, respectively, to close last Friday at 30,719.36 points and N10.251 trillion.
Thirty-three (33) equities appreciated in price during the week in review, lower than 40 equities in the preceding week. Thirty-six (36) equities depreciated in price, higher than 30 equities in the preceding week, while 127 equities remained unchanged, higher than 126 equities recorded in the preceding week.
Iheanyi Nwachukwu
