The Nigerian equities market may further favour a mix of bargain hunting and sell-off as there is still not much positives information capable of triggering a sudden rebound after investors lost N1.4 trillion last month.
Investors concerns
Investors’ concerns – such as expected lower earnings by companies in 2014 financial year continued, lowering in oil prices, volatility at the foreign exchange market, concerns over outcome of elections – have persisted and remain major factors driving investor’s pessimism at the equities market.
Market review
Last week, there was a mixture of bargain hunting and sell-off at the local bourse, which later favoured the latter as market declined by 0.84 percent because many stock buyers failed to shift their wait-and-see stance on equities.
Twenty-eight equities appreciated in price last week, lower than 35 equities in the preceding trading week. Forty-one equities depreciated in price higher than 31 equities of the preceding week, while 127 equities remained unchanged lower than 130 equities recorded in the preceding week.
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The NSE All-Share Index and Market Capitalisation depreciated by 0.84 percent to close last Friday at 29,562.07 points and N9.847 trillion, respectively.
Similarly, all indices finished lower during the week in review with exception of the NSE Lotus Islamic Index and NSE Industrial Goods Index that rose by 0.88 percent and 1.14 percent, respectively, while NSE ASeM Index closed flat.
Market analysts linked the bearish outing last week to continued expectation of a tight monetary policy environment in light of the bleak macro-economic outlook.
Trend analysts
Only last month, as sell pressure weighed on equities, the NSE ASI lost 5,095.08 points from 34.567.15 points to 29,562.07 points. Also, investors lost N1.4 trillion last month as equities prices crashed. The value of listed equities crashed from last month open level of N11.24 trillion to N9.85 trillion at the end of January 2015. Amid this dismal outing last month, most analysts expect the market to witness further mixture of bargain hunting (as stock prices bottom out for value hunters) and sell off, as risk premium on Nigerian equities remains high compared with other emerging markets.
Analysts view
“As the election draws closer and the political environment gets hotter, investors’ apathy towards equities is expected to be more pronounced, leading to further sell-offs. A mix of position taking and speculative exists should however lead to a relatively flat market this week, albeit in favour of the bears,” said research analysts at United Capital plc.
“On the back of recent increase in oil prices, we expect that investors would be encouraged to lock into under-valued counters, hence we expect to see more gains in the next trading session. We note that oil prices are now trading above their 30-day moving averages, the first momentum change since July 2014”, United Capital analysts added.
According to investment analysts at Access Bank plc, “we anticipate bargain hunting for undervalued stocks will lift the market.”
In a similar view, research analysts at Cowry Asset Management Limited said: “This week, we anticipate a mix of bargain hunting and sell offs amid existing buy signals.”
