• Friday, June 21, 2024
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BusinessDay

Caution still the word for stock investors in new trading week

Nigerian-Stock-Exchange

It’s not yet a good period for stock investors to take that big-ticket decision on the Bourse as most of the risks capping market’s rally remain on the horizon.

Nigeria and other markets will begin to price more caution given the upcoming volatile U.S. election, and particularly if U.S.-China animosities do not ebb away.

This is in addition to the yet-to-wane global Covid-19 related deaths as well as volatile crude oil market as evidenced in its prices that trade in a relatively tight range for the last few weeks.

Be “cautious” is our word of advice for investors this week, because speculative buyers may choose to take profit on some counters that saw significant price appreciation recently.

Nigeria’s stock market had last week recorded value increase in excess of N82billion amid increased activities on the buy-side of Bourse.

The market rallied last week on the back of gains in Consumer Goods (+2.25 percent) stocks as well as that of Oil & Gas (+5.92 percent), and Insurance (+1. 12 percent) as more investors took position in fundamentally attractive counters as against pockets of profit taking activities in Banking sector (-0.03 percent)
and Industrial Goods (-2.71 percent).

“Our view continues to favour cautious trading as risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions. Thus, we continue to advise investors to seek trading opportunities in only fundamentally justified stocks”, Cordros Capital research analysts said.

“Despite the attractiveness of a number of fundamentally sound stocks, we expect the market to remain volatile in the short term amid the persistent uncertainties in the global and macro-economic environment, hence, a cautious trading strategy is advised”, said equity research analysts at Lagos-based Vetiva Securities.

Week-on-week (WoW), the Nigerian Stock Exchange (NSE) All-Share Index (ASI) and Market Capitalisation appreciated by +0.63 percent
to 25,199.84 points and N13.145trillion in the trading week ended Friday August 14 as against week-open low of 25,041.89 points and N13.063 trillion respectively.

“As COVID-19 restrictions are further eased, expectations for corporate performance appear to brighten up from the pessimism expected earlier in the year. Although pre existing risks remain, investors have reacted positively to results that were resilient in half-year (H1) 2020 and show promise of dividend payment”, according to Lagos-based analysts at Meristem.