Investment experts at Bancorp Securities Limited, one of Nigeria’s frontline investment research and consulting firms, have projected that the Nigerian Exchange may sustain varied sectoral performance this week amid fiscal and other macroeconomic uncertainties of the economy.
The experts, who made the projection in the firm’s ‘Weekly Stock Recommendation: Oct 28 to Nov 1, 2024’ circulated to our correspondent on Monday, however, predicted that banking and insurance stocks may strongly perform despite the not too bright outlook of the local bourse.
According to the analysts, the oil and gas sector stocks could experience volatility during the trading sessions this week, the industrial sector stocks may post moderate returns, while the consumer goods stocks could be hampered by the surging inflation rate impact on consumers’ spending.
The investment researchers forecasted that the FX automation initiative and the strengthening of dollar reserves position Nigeria for short- term naira stability and potential long-term economic resilience, adding, however, that challenges in the parallel market and geopolitical factors require close monitoring, as they could affect FX rates and overall economic performance.
They clarified: “The Nigerian stock market in Week 44, 2024, may continue to experience varied sectoral performance. The banking sector outlook is strong, buoyed by investor interest and seasonal earnings, with the potential for further gains if FX automation attracts foreign inflows.
“Similarly, the insurance sector may see steady gains, benefiting from improving liquidity and consumer confidence. However, the oil & gas sector could face volatility due to geopolitical tensions and fluctuating oil prices, despite recent resilience. The industrial sector may see modest growth driven by selective buying in companies with solid earnings, while caution remains due to inflation pressures.
“Meanwhile, the consumer goods sector could remain constrained by inflation’s impact on spending, with investors likely favoring companies with strong fundamentals for risk mitigation”, the firm’s analysts added.
