Despite that most analysts still expect further unwelcoming mood at the stock market pending when listed companies start releasing their half-year (H1) results, the current prices of most value stocks could be positive game changer in the market.
After over N138billion lost last week when investors’ apathy fed the bears at the stock market, most equity buyers may choose to latch-in on some down-beat (but value) stocks at the market ahead of any rally in third-quarter (Q3).
Recall that the stock market almost reversed the whole of last week’s loss in last Monday’s trading gain of N135billion.
“This week, we anticipate renewed bargain hunting activities, especially on beat-down value stocks following weeks of sell offs,” investment analysts at Cowry Asset Management said.
Amid recent optimism, investors at the Nigerian stock market anxiously wait on forex (FX) and macro policy directions –major factors that caused a record of choppy deals at Custom Street.
“Although valuations appear attractive at current levels, we expect uncertainties presently rocking the wider economic environment to filter through to the market this week thus driving weak sentiments and choppy trades”, according to research analysts at Lagos-based United Capital plc.
“Consequently, market is likely to hover around flat, as the wait for positive sentiment triggers continues. Nonetheless, the market looks ripe for bargain hunters especially those with a medium to long term view on Nigerian equities. In our view, patience is the ruling theme, given current dynamics” United Capital analysts further said.
Also, research analysts at Financial Derivatives Company Limited said recently in their bi-monthly economic and business update that they expect the second half (H2) of the month to be calm as activities on the exchange remains low paced.
“Investors await appointments of the new economic team by the present administration and a firm policy direction to drive the bourse. The stock market is expected to remain bearish as investors seek safety in treasury bills (T-Bills) and evaluate the risk of a further depreciation of the naira” analysts at Financial Derivatives further added.
They noted further that as with other emerging markets, the Nigerian equities market may witness Foreign Portfolio reversals as the U.S Federal Reserve prepares to increase interest rates in September.
“Stock market mood dampened on the activities of bargain hunters as the market remained quiet over unclear direction on economic policy frontlines. This week, we are less optimistic that there would be a turnaround in current trend,” according to team a economic intelligence at Access Bank plc.
“We opine that the fragile state of the economy, evident in unfavourable key indicators such as rising rate of inflation, weakening currency, dwindling reserves, rising public debt and relatively slow momentum of economic growth, will continue to impact negatively on investors’ sentiments,” said analysts at another Lagos-based investment house, Meristem Securities Limited.
