Equities with good fundamentals will be major benefactors of slim funds flow into the Nigerian bourse this week, market watchers believe.
Already, equity investors appear to be losing patience in their decision to hold stocks, despite analysts view that the market would likely turn positive in the medium-to-long term as companies release their full-year financial.
On a larger scale, by implication, as investors resort to cautious trading, the likelihood of a decline in the already recorded market’s growth of 19.33 percent year-to-date (ytd) is no longer in doubt. This, according to market watchers, will amount to shift away from the recorded growth last week.
The NSE All-Share Index has appreciated by 556.80 points or 1.69 percent to close last Friday at 33.506.88, while the market capitalisation of the listed equities on the main board increased to N10.722 trillion.
Further proving this outlook in favour of the bears this week, the buoyant mood at the market calmed early this week (Monday) as sales pressure outweighed equities, thereby affecting stocks pricing. Only last Monday, investors lost N12 billion from the market, signally a decline in demand for stocks.
In his view, Sewa Wusu, head, research and investment advisory, Sterling Capital Markets Limited, told INVESTOR that market activities for the week will most likely be influence by the high expectations of the release of 2012 financial year-end results, most especially by the banks and some blue-chip companies.
According to him, “although, the expectation of impressive corporate benefits in terms of dividends may have been priced into equities, the only anticipated drag would be if the results cum dividends declared fail to meet market expectations. This would most likely change the market direction to induce a sell down. All said, we expect a favourable market uptick.”
Index movement at the stock exchange last week showed that.
Further proving this outlook in favour of the bears this week, the buoyant mood at the market calmed early this week (Monday) as sales pressure outweighed equities, thereby affecting stocks pricing. Only last Monday, investors lost N12 billion from the market, signally a decline in demand for stocks.
In his view, Sewa Wusu, head, research and investment advisory, Sterling Capital Markets Limited, told INVESTOR that market activities for the week will most likely be influence by the high expectations of the release of 2012 financial year-end results, most especially by the banks and some blue-chip companies.
According to him, “although, the expectation of impressive corporate benefits in terms of dividends may have been priced into equities, the only anticipated drag would be if the results cum dividends declared fail to meet market expectations. This would most likely change the market direction to induce a sell down. All said, we expect a favourable market uptick.”
Index movement at the stock exchange last week showed that numbers. A bullish outlook in the coming session may push some equities above their fair value. This may not diminish the positive sentiment at this time.”
The analysts add: “Giving more weight to equities in portfolio may pay-off in the medium term. This should also be balanced with fixed income instruments. We recommend Consumer and Industrial Goods stocks with good fundamentals.”
In addition, Meristem Securities analysts, say: “We expect slight profit-taking on stocks which have significantly gained in the past two consecutive weeks, while we also expect bargain hunting on some underpriced stocks that offer good entry points.
“Dividend yield on results released so far has largely been below 5 percent, owing to price rally in the year. Expectation on likely corporate action will be the key investment decision tool. Though we do not expect the banks to release results this week, we forecast a market return of less than 1 percent in the week to be driven by dividend declarations in other sectors.”
Stories by IHEANYI NWACHUKWU
