Analysts’ sentiment still favours the bears

Analysts’ near-term sentiments regarding Nigerian equities market is further seen favouring the bears, despite their expectations that investors move towards speculative trading will help limit loss compared to the previous week.

The Nigerian equities market took-off this week on a negative note while stock prices remained under pressure as key investors appear to be unconvinced about the strength of the domestic macro-fundamentals in spite of the expansionary monetary stance of the MPC.

“The equities market is expected to be sentiment-driven in the near-term defying record low money market and fixed income yields. On a balance of risks, the easing stance of the MPC appears negative for banks, and is likely to tilt market sentiments further southward,” according to research analysts at United Capital plc in their investment view this week.

The analysts added: “Although the broader market appears grossly oversold on technicals, a key catalyst will be a fundamentally driven Foreign Portfolio Investment (FPI) buy bias, which appears remote now in our view given CBN’s unwavering FX policy stance. However, we expect speculative trading to limit losses this week relative to the previous week.” 

The Nigerian Stock Exchange (NSE) All-Share Index and Market Capitalisation depreciated by 1.83% and 1.81% to close last week at  27,617.45 points and N9.495 trillion respectively.

“We anticipate moderate levels of bargain hunting activities in the coming week on fundamentally justified stocks, however, we advise investor trade with caution”, research analysts at Meristem Securities said.

Only last week, twenty-one equities appreciated in price during the week in review, higher than nineteen equities in the preceding week. On the contrary, forty-one equities depreciated in price, same as the number of equities that declined in the preceding week, while 128 equities remained unchanged, lower than 130 equities recorded in the preceding trading week.

“We anticipate sustained bear pressure amid weakened economic fundamentals,” said market analysts at Cowry Asset Management. While reviewing the market performance last week, the analysts noted that in line with their expectations, “the local bourse witnessed sustained bear run save for single day in positive territory following the reduction in benchmark interest rate to 11 percent from 13 percent,”

“This week, we anticipate that performance gauges may remain less impressive, as the cautious mood by investors persist,” said economic analysts at Access Bank plc.

Iheanyi Nwachukwu