Researchers at Bankcorp Securities Limited, a leading investment research and consulting services providing company, have projected that trading on the Nigerian Exchange (NGX) this week will be flattish, with a predominant bearish sentiment characterizing the sessions.
The experts, in the firm’s ‘Weekly Stock Recommendation: Mar 25 to Mar 29, 2024’ circulated to our correspondent on Monday, hinged their forecast on the overwhelming investor sentiment which is poised to subsist gains from equities in favour of higher, less volatile fixed income yields
The analysts noted that data released by the National Bureau of Statistics (NBS) in the preceding week, showed significant increases in both fuel and food prices, highlighting rising inflationary pressures during the period.
For instance, they recalled that in the NBS reports, petrol prices surged, with an average retail price of N679.36/l in February 2024, marking a 157.57% increase compared to February 2023 just as diesel prices also rose by 50.20% year-on-year to N1,257.06/litre HHK prices increased to N1,340.94/litre in February 2024, a 14.23% rise from February 2023.
Similarly, the Bureau’s data further reflected that cooking gas prices saw a significant month-on-month increase, with a 19.75% rise in the price for refilling a 5kg cylinder while selected food items surged as the average price of 1kg of Rice local sold loose grew by 134.81% year-on-year, reaching N1,222.97 in February 2024.
In addition, the firm’s experts also stated that FAAC’s disbursement totaled NGN2.07 trillion for February 2024, representing a 0.24% increase from January 2024 disbursements.
The experts further clarified: “The above are major catalysts to the rising supply side inflation as experienced in Nigeria, which printed at 31.70% in February 2024. This persistent inflation indicates significant ongoing inflationary risks that the MPC will likely address in its upcoming extraordinary meeting scheduled for March 25 & 26, 2024.
“It is our expectation that proceeding from a 400 basis points hike in the previous MPC meeting, and the observed success from its policy reforms, the objectives is expected to encompass further tightening of monetary conditions, reduction of negative real interest rates, and anchoring of inflation expectations.
“The upcoming week in the domestic bourse is expected to trade flattish, with a predominant bearish sentiment, as the overwhelming investor sentiment is poised to subsist gains from equities in favor of higher, less volatile fixed income yields”, the analysts projected.
