Stock analysts favour mixed sentiment this week

Despite that Nigeria stock market opened this week in green after record N140billion loss last week, analysts expect mixed sentiment to trail the market this week.

“We anticipate a mixed sentiment in the equities market due to weakened investor sentiment,” Futureview research analysts said in their recent weekly economic and capital markets review.

The National Bureau of Statistics (NBS) published the June inflation report which indicated that headline inflation increased by basis point 24 basis points (bps) to 34.19percent, putting another rate hike in focus.

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“This week, we will continue to observe market trends closely and, if necessary, make mid-week portfolio changes in our Daily Market Summary,” said CardinalStone Research who noted that their Model Equity Portfolio (MEP) declined by 0.18percent last week, outperforming the benchmark index by 17 basis points (bps).

Also in their July 15 breakfast report, Vetiva research analysts said they expect the market to “trade in a rangebound manner, albeit with a bullish tilt, as investors retain a risk-on stance towards the equity market”.

In push to defeat inflation, Nigeria’s policy makers have consistently hiked its benchmark interest rate which makes fixed income securities attractive than equities.

Also, analysts at Meristem research said, “This week, we expect mixed sentiments in the equities market, leaning towards an overall bearish trend. The subdued mood is likely to persist due to a lack of positive triggers or significant macroeconomic developments to spur optimism”. They anticipate occasional profit-taking on stocks that have recently seen gains.

“Nevertheless, there may be pockets of buying interest, particularly with expectations of more announcements from the banking sector and repositioning ahead of earnings releases. Overall, we foresee the equities market closing the week in the negative territory,” the Meristem research analysts further said.

“Looking forward, the equities market is expected to show mixed performance as investors adopt opportunistic investment strategies. We foresee selective buying of fundamentally strong stocks continuing into the upcoming week,” said Lagos-based United Capital research analysts.

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They anticipate market activity to rise due to ongoing banks’ recapitalisation efforts, second quarter (Q2) filings, and anticipated corporate actions in the near term.

“Conversely, elevated interest rates in the fixed income market are likely to exert a negative influence on equities as investors capitalise on higher fixed income yields. Overall, fund managers and investors are advised to maintain an opportunistic approach to capitalize on prevailing market opportunities,” United Capital analysts further said.