• Saturday, March 02, 2024
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BusinessDay

Stock market sentiment still tilts towards profit-taking

Nigerian stock market looks set to further slope southwards following persisting speculative trading at the nation’s bourse.

The bearish situation may even be worse-off this week as negative impact of Nigeria’s weak macro outlook continues to weigh on the local markets.

With no reprieve in view and the postponement of ministerial appointment till next month by President Muhammadu Buhari, many stock investors sentiment have been preoccupied by uncertainties.

As analysts continued their bearish view on oil price, it implies major risk overhang on Nigerian equities and forex market.

In the midst of a negative take-off this week, Nigerian equities had lost about N253billion last week as investors besieged the Nigerian Stock Exchange (NSE) and took profit on some stocks.

This resulted in about 736.09 points or 2.34percent decline in the Nigerian bourse benchmark indicator –the NSE All Share Index (ASI).

The NSE ASI which stood at 31,441.71 points at the beginning of stock trading last week closed lower at 30,705.62 points last Friday.

The equities market capitalisation decreased to N10.524trillion from a high of N10.777trillion at the beginning of deals last week.

The stock market has consistently recorded increased supply against declining demand, leading to drop in value stocks prices.

ARM researchers analysts said deteriorating fundamentals have exacerbated bearish equities performance.

“In addition to political and macro headwinds, weak earnings outlook across NSEASI contributed to bearish market sentiment over first-quarter (Q1) 2015 before the tailwinds from the benign closure to the elections cast market attention off fundamentals during second-quarter (Q2) 2015 and towards policy trajectory of incoming Buhari government,” ARM research analysts noted in their recent report titled “changing political landscape amid stagnant economic fundamentals pose fresh hurdles to NSEASI.”

Last week, only sixteen (16) equities appreciated in price, lower than thirty-seven (37) equities in the preceding week. Fifty-eight (58) equities depreciated in price, higher than twenty-nine (29) equities in the preceding week, while one hundred and sixteen (116) equities remained unchanged, lower than one hundred and twenty-four (124) equities recorded in the preceding week.

“The market is likely to remain gloomy due to possible profit-taking activities by investors,” according to Access Bank team of economic intelligence.

“Speculative activities have been the key driver in the market in recent times with some level of activities from long term investors as value stocks remain attractive. We look to see continued short term tactical plays this week with modest bargain hunting, albeit more tilted towards profit taking. Thus, we expect the equities market to remain gloomy this week; hence we advise investors to trade cautiously with a medium to long term horizon”, said research analysts at Lagos-based United Capital plc.

“We anticipate overall bearish sentiment following recent lackluster half-year (H1) earnings releases,” said analysts at Cowry Asset Management Limited.

 Iheanyi Nwachukwu