Mixed sentiment trails stocks as H1 earnings season enters full gear

There are still varied views trailing stocks buying this period despite that many companies are releasing their half-year (H1) scorecards. In the trading week to July 26, the Nigerian equities market extended its bearish run as the benchmark index declined by 0.003 percent.

The NSE All- Share Index and Market Capitalisation both depreciated by 0.003percent to close the review week at 27,918.59 points and and N13.606 trillion respectively.

While many analysts at the Nigerian Stock Exchange (NSE) see the market’s recent low as opportunity for bargain hunting on select names, others see no immediate rebound as the market continues its search for positive drivers.

“Our outlook for equities in the short to medium term remains conservative, in the absence of any drivers of market returns” said research analysts at Cordros Capital.

Summary of price changes last week show 31 equities appreciated in price, higher than 15 equities in the preceding trading week. Twenty-nine (29) equities depreciated in price, lower than 52 equities in the preceding week, while 109 equities remained unchanged, higher than 102 equities recorded in the preceding week.

Afrinvest analysts had on Monday July 29 expected investors to resume bargain hunting due to sharp losses in some stocks recently, “especially those with positive H1:2019 earnings.”

While warning that the Nigerian market is currently not for the nervous, they anticipate that the Index will this week continue to wander within the negative territory. “But why are we pessimistic? All indicators strongly suggest there are no possible triggers to herald a rebound.”

Also, amid the positive start to this week’s trading (N15billion gain or 0.11percent rise in ASI), as H1’19 results continue to trickle in at the Lagos Bourse, analysts at Vetiva Securities said they foresaw a mixed and busier session on Tuesday July 30 with a slightly bearish bias.

On the contrary, analysts at United Capital Plc in their July 26 note believe the outlook for emerging and frontier market equities will remain positive through second- half ( H2) 2019 “on the back of the expectation for a more dovish global monetary policy.”

“For SSA, we expect interest in equities to remain fundamentally driven as the heavy-weight market movers – foreign portfolio investors ( FPI) continue to look for bold economic reforms as a fundamental reason for buying equities. Thus, in the absence of any new reforms in H2-19, we expect sentiments to remain similar to that of H1-19”, they noted.