Equities market sets for negative weekly close despite early day gains

Nigeria’s equities market looks good for a negative weekly close as sell pressure continues to outweigh the buy sentiment in the short-term.

Despite mild gains (+0.02percent) seen in early trading (11.23am) on Friday, the market’s broad-based bearish sentiments thrive ahead of next week’s Monetary Policy Committee (MPC) meeting.

The stock market hasn’t done well this week as activities in the fixed income market remain key demotivator for equities investments.

The stock market had decreased this week by 4.24 percent and its negative close on Thursday followed analysts earlier views that trading in stocks of the 155-member companies will revert to bearish trend unless there was major upside in the large-cap counters.

As at time of filing this report, the Nigerian Exchange Limited (NGX) All Share Index (ASI) has risen from preceding day’s low of 101,239.1 points to 101,255.06 point. The market’s year-to-date (YtD) return remains in positive region of 35.39 percent.

“The uncertainty and overall market expectation of a hike in the MPC’s next meeting (to be held on 26th and 27th of February 2024) may underpin a cautious investment approach toward risk assets.

“Given the tremendous value that still exists in the equities market, on the back of currently undervalued stocks particularly the banking stocks (which are currently trading beyond the oversold region), we still expect background bargain hunting activities, albeit overshadowed by the short-term negative sentiment, pending the release of Full Year 2023 financial results and corporate actions from top-tier banks, and other corporates,” said United Capital analysts ahead of this week’s trading.

“We have seen gradual improvement in market breadth, as sell-offs moderate across board,” according to analysts at Vetiva research who expect a negative weekly close today.