In the recent past, the Nigerian stock market had a relatively big selloff that buoyed investors’ cry, but the market is coming back nicely.
The stock market’s year-to-date (YtD) loss in the negative territory of 5.42 percent as of last Friday, further creates some opportunities for investors to get back in the market with cheaper good stocks.
As third-quarter (Q3) earnings trickle down at the bourse, investors are already pricing into fundamentals of companies that released impressive results, a development that can validate the optimism for a rebound.
Most analysts would put everything on earnings season, because it continues to be a big deal in the market – we are right in the middle of it.
Though the market gyration continued this week like other global markets, the NSE All Share Index and market capitalisation had last week risen by 2.33 percent to close at 39,087.10 and N12.906 trillion, respectively.
Analysts expect the market to maintain the positive sentiment as all sector records gains for the week. More investors are expected to take position to benefit from the current low prices.
Month-to-Date (MtD) and Quarter-to-Date (QtD), the NSE All Share Index (ASI) declined by 5.15 percent, a trend driven mostly by banking and consumer goods stocks price hemorrhage.
Some foreign analysts told INVESTOR that at a year-to-date loss of 5.42 percent, the Nigerian stock market is still far from the bear market which is measured by above 10 percent loss when benchmarked against its previous highs.
After six weeks of volatility in global financial market, analysts at FBN Capital Limited, a Lagos-based investment house, reappraised the recent stance of monetary policy committee (MPC) of the CBN, noting that easing was an option, and the focus had moved to when (not whether) to tighten.
Foreign buyers, who control reasonable percentage of stocks dealings on the local equities market, say many have been focusing exclusively on the negative effects of lower oil prices on foreign exchange while neglecting the beneficiaries.
Investors are concerned about outcome of elections, insecurity, but their fears are being cushioned by future prospects relating to economic growth, and low inflation rate.
“We expect a mix of bargain hunting and speculative activities to dictate the direction of the equities market this week,” said market analysts at Lagos-based UBA Capital plc.
Sill on equities, these analysts said: “While we do not anticipate significant push from earnings releases, given the macro headwinds and reduced liquidity inflows from foreign and domestic institutional investors, we look to see some side-way trading within the week.”
Though, the analysts appear to be pessimistic in their market performance outlook as they said: “We expect the market to close negative for the week.”
Iheanyi Nwachukwu
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