Analysts in the country’s capital market foresee a stable equities and fixed income markets this week given last week’s market activities.
The Nigerian Stock Exchange All-Share Index would have closed lower last week but for the surge in Nigerian Breweries Plc’s stocks late in Friday’s session.
Analysts at Vetiva Capital Management Limited said, “We believe there could be a reversal after the Independence holiday on Monday even as market breath turned widely negative.”
On the fixed income market, they said considering the bearish close to the week amid tight system liquidity, “we anticipate a relatively tepid trading session after the Independence Day holiday.”
However, given the dearth of dollar supply amid high dollar demand, the analysts expect the naira to shed more weight across markets this week.
The Nigerian bourse traded sideways in the past week with the NSE ASI hovering round the flat-line for most part of last week following mixed performances across key sectors.
However, the NSE ASI closed 31 basis points higher on Friday, buoyed by advances in a number of bellwether stocks.
Overall, the ASI posted week-on-week gains of 0.31 per cent and year-to-date loss pared to 1.07 per cent.
The fixed income market traded mixed in the previous week amid consistent liquidity mop-up by the Central Bank of Nigeria. Overall, yields in the Treasury bills and bonds space advanced 167 basis points and 40 basis points, respectively.
At the parallel market, the naira dipped to new lows fuelled by dollar scarcity amid rising dollar demand.
To this end, analysts at Meristem Securities Limited said, “Last week resumed with profit taking activities on counters that rallied in the penultimate week. However, OPEC members’ decision on output freeze swayed market sentiment to the positive direction during the last trading days of last week. We anticipate this seesaw movement to persist in the absence of any market-moving information this week.”
For the agriculture stocks, the analysts said, “We attribute the sector’s performance to persistent profit taking activities on Presco Plc last week. In the coming week, we do not expect significant activities, considering the dearth of news inflow to drive momentous price changes.”
The depressed mood in the banking sector, they noted, was primarily due to profit taking activities on sector heavyweights.
“While we anticipate mixed investors’ sentiments this week, we expect the sector to record a moderate week-on-week gain, hinged on bargain hunting activities.”
For consumer goods stocks, while bargain hunting activities were sustained last week, the analysts observed some investors took profit on a couple of stocks that rallied in previous weeks.
“This week, we expect profit taking to prevail amid varied sentiments,” they added.
For healthcare sector stocks, they said, “As expected, healthcare stocks continued their seesaw trend last week, as certain stocks which recorded price appreciation earlier in that week witnessed some shedding towards the tail end of the week, and vice versa. Barring any significant news inflow, they expect the trend to be sustained till the quarter three 2016 results start streaming in.
The industrial goods sector’s performance was driven by a mix of bargain-hunting and profit-taking on the sector’s large cap stocks.
Considering the macroeconomic shift towards fostering inclusive growth in the country through increased capital expenditures, the Meristem analysts expect investors to consistently take positions on the sector counters as events unfold.
They expect insurance sector’s performance this week to be dictated by the general market mood, in the absence of any market moving news flow – although they see some possibilities of bargain hunting on some of the sector’s stocks this week.
For oil and gas stocks, they said, “The sector resumed last week on a negative note, on the back of profit taking on most counters that rallied in previous weeks. However the late news on OPEC’s proposed output freeze, swayed market directions to the positive wing on the last trading days of last week. We expect investors to continue to react to this news even this week.”
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