Investors in the stock market resorted to profit taking last week just as fixed income market activities remained flat, with rates declining. Analysts said this is likely to make the equity space more attractive this week, considering the better-than-expected half-year corporate earnings that were released to the market recently.
They further noted that the moderation in oil price in the international market (now at $65 per barrel) may not affect the Nigerian stock market immediately due to less participation of foreign investors.
Meanwhile, the profit taking which became aggressive on the last trading day (Friday) of the week resulted in a huge loss of -0.5 per cent eroding the cumulative 0.4 per cent gain recorded in the previous four days trading.
Massive selloffs in bellwether stock, Nestle Nigeria, compelling -9.1 per cent depreciation, drove the weekly loss. As a result, the All-Share Index declined by 0.1 per cent Week-on Week, W-o-W, to close at 39,483.08 points while market capitalization depreciated by 0.10 per cent or over N20 billion to close the week at N20.571 trillion as against N20.591 trillion previous week.
Consequently, the Month to Date, MtD, and Year to Date, YtD, return settled at 2.4 per cent and -2.0 per cent, respectively. Activity levels were weaker than the prior week, as trading volumes and value declined by 45.9 per cent W-o-W and 2.4 per cent W-o-W, respectively.
Except for the Industrial Goods Index which gained 1.9 per cent that closed in the green; the Consumer Goods index declined -6.3 per cent, Insurance Index -1.0 per cent, Banking Index -0.8 per cent and Oil and Gas index -0.6 per cent closed in the red.
Commenting on market outlook, analysts at InvestData Consulting Limited, said: “We expect a pullback on the markdown of MTN for its N4.55 dividend, besides profit-booking and repositioning in value and growth stocks on the strength of half-year earnings reports, while investors continue their portfolio reshuffling and studying of the corporate earnings ahead of first-tier banks results and second quarter,Q2 Gross Domestic Product, GDP data release, as well as results from interim dividend-paying banks.
“We note also that some stocks are trading within their buy ranges to become more attractive at this point for income investors and traders, even as the market anticipates positive news, while oil price continues to oscillate above $68 per barrel,pb to support the global economy and stock market recovery across climates.”
Commenting as well, analysts at Cordros Securities Limited, said, “We expect the bulls to regain dominance in the market given the moderation in the prices of bellwether stocks last week amid the declining yields in the fixed income market.
“However, we do not rule out the possibility of continued profit-taking activities.
“As a result, we think the choppy trading pattern that played out this week will persist in the week ahead.
“Overall, we advise investors to take positions in only fundamentally justified stocks as the weak macro environment remains a significant headwind for corporate earnings.” [Vanguard]
