Investment researchers at Bancorp Securities Limited, a leading investment research and consulting firm, have predicted appreciable positive sentiments in the Nigerian Exchange trading sessions as investors would reposition amidst the previous week’s lower prices
The experts, in the firm’s ‘Weekly Stock Recommendation: April 22 – April 26th 2024’ report noted that the nation’s economic landscape remained challenging, with headline inflation soaring to 33.20% year-on-year in March 2024, representing a significant 150-basis point increase from the previous month’s figure of 31.70%.
They noted that the surge in the general price level in the economy was primarily driven by a 2.51% increase in food inflation, reaching 40.01%.
According to the analysts, as the apex bank adopt a more stringent inflation targeting framework, potentially including measures aimed at bolstering the value of the Naira, the strategic shift is anticipated to offer some respite to the prevailing economic strains.
They further noted that the Central Bank of Nigeria (CBN) recently announced a reduction in the Loan-to-Deposit Ratio (LDR) by 15 percentage points, down to 50% from 65%, aligning with a similar increase in the Cash Reserve Ratio (CRR) rate for banks.
The experts maintained that while the measure was aimed at addressing compliance issues among banks, as many were not compliant, resulting in LDR-induced CRR adjustments, the move is expected to allow banks the availability of more unsterilized funds.
On the capital market trading trend in the current week, the Bancorp Securities experts projected: “In the domestic market, appreciable positive sentiments are expected in the current week following investor positioning amidst the previous week’s lower prices.
“This outlook is further reinforced by the approaching deadline for banks to submit their capital-raising plans, birthing directional strategies for both issuers and investors to optimize capital gains and portfolio returns.
“The market may witness the impact of this development in the days ahead, potentially influencing investors’ sentiment and market dynamics”, they added.
