Mixed sentiments trail stocks as more H1 results berth

In Nigeria’s stock market today, most investment analysts are still positive in their expectations, while some others do not foresee any sudden change in the present situation as equities return routes in excess of minus 10%.

As analysts varied views further ignite the stage for mixed feelings among stock investors, a combination of other factors staring at equity buyers’ face also triggers more caution plays on Customs Street.

The positives include current attractive prices of value stocks (good for bargain hunters seeking reentry); and investors optimism which could be supported by improved half-year (H1) results by listed companies.

The negatives include the perceived inertia on the side of foreign investors who not increasing their stake in Nigerian investible instruments (particularly equities) as economic outlook dims due to oil price decline as well as loss of confidence in the naira exchange rate against the greenback.

The situation is even worse-off as a result of shrinking wallets of most investors due to delay or non-payment of workers’ salaries.

Though last week, the NSE All-Share Index (ASI) and equities market capitalisation appreciated by 0.14% and 0.27% to close on Friday at 31,091.69 points and N10.657 trillion respectively; the ratio of gainers to losers at the Exchange further provides clarity concerning investors mood at the stock market.

In the week ended July 24, 2015, twenty-eight (28) equities appreciated in price, higher than thirteen (13) equities in the preceding week; while forty-four (44) equities depreciated in price, lower than fifty-seven (57) equities in the preceding week. One hundred and eighteen (118) equities prices remained unchanged, lower than one hundred and twenty (120) equities recorded in the preceding week.

In a contrary view, research analysts at Lagos-based Cowry Asset Management Limited said “We expect to see mixture of bargain hunting and profit taking activities”, saying that in line with their expectations, the equities market witnessed increased bargain hunting activities which resulted in share price appreciation across the board.

“The market may likely remain bullish on excitement over expected half-year results,” according to team of economic intelligence at Access Bank plc who noted that last week the stock market closed bullish for the first time in weeks as investors positioned for stocks with high valuation ahead of more first-half (H1) results.

“While we expect to see some level of position taking in the market with fundamentals and technicals justifying an entry, we think reaction to corporate earnings and profit taking might knock off a possible bullish run,” said research analysts at United Capital plc.

The analysts said: “We expect to receive more earnings report this week, which will likely not be adequate to spur notable and sustained positive reaction; also, last week gains will likely trigger profit taking by speculators. Steered by our postulations, we see the market closing the week marginally negative”.

Also in their view, analysts at Meristem Securities said with more corporate releases anticipated this week, coupled with their expectation of uninspiring results, “we opine that activities on the equities bourse might remain sluggish”.

Iheanyi Nwachukwu