Analysts at Bancorp Securities Limited, a leading investment research and consulting services firm in Nigeria, have predicted a bearish momentum in the Nigerian equities trading sessions this week as profit- taking actions will predominantly define investors’ options.
In the firm’s ‘Weekly Stock Recommendations Jun 26 – Jun 30, 2023’ sourced by BRTNews.ng on Monday, the analysts noted that last week, bullish momentum continued in the local bourse, albeit at a slower rate, with the ASI gaining 0.35% W-o-W at market close last Friday, thereby enhancing the performance of its YTD returns that settled at 15.52%.
The experts also recalled that the activity in the financial services sector, Oil & gas sector, Conglomerates sector and the Consumer goods sector, drove the trading activities with 75%, 5%, 4% and 4% volume contributions respectively.
According to the investment researchers, the equities market has been rallying in recent weeks in response to evolving macroeconomic policies but that the bullish momentum is thriving as a slower rate, primarily because the traded assets have absolved directional fundamental news.
The analysts noted that “however, the Insurance sub-sector has continued to be a noticeable hub of interest for investors, given the significant niche the sector is playing in an enhanced information and technology driven society in Nigeria, additionally, constituent stocks in this sector hare low cap stocks, and present goo entry points for portfolio inclusion.”
Despite the bullish performance of the local bourse over the past few days, the Bancorp Securities’ experts advised investors to be wary about the stocks to invest in to avoid pitfalls given the not-too-bright prospect of many of the equities.
They recommended: “We therefore implore investors, to trade on assets with good fundamentals. This week, we expect profit taking actions to define predominantly, investors’ trades. Thence, bearish sentiment is most likely to culminate the totality of the current week’s returns.”
On the choice of stock as buy for investors this week, the analyst recommended LAFARGE (WAPCO) and NESTLE but advsied investors to ‘hold’ decision on NIGERIAN BREWERIES due to its current returns prospect.
The experts, however, “expect that once macroeconomic environment is stabilized enough as it relates to inflation and foreign exchange, this stock is low enough for a good entry point.”
