Investment experts at Bancorp Securities Limited, one of the leading investment research and consulting firms in the country, have predicted that the bearish sentiment that characterized the equities market last week will be sustained this week in view of the current macroeconomic dynamics of the economy.
The researchers, who made this forecast in the firm’s ‘Weekly Stock Recommendations July 17- July 21’ report, recalled that trading in the local bourse last week was mixed as the week began with the sustenance of bullish drive up until midweek, when bearish sentiments dominated the trading sessions and closed the NGXASI negatively on a WoW basis, thereby losing 0.75%
While noting that the Nigerian Equity market has reasonably adjusted to the reality of the fuel subsidy removal, the investment researchers maintained that the performance of the equities market was a pointer to the expectant policy adjustments of both the monetary and fiscal post inflation as the MPR is scheduled for Tuesday, July 25, 2023.
The experts stated: “Low cap stocks, with good fundamentals in the Consumer goods and Industrial goods indexes will continue to be of interest to investors in coming weeks. Bearish momentum is expected to persist although at a slower rate in the Insurance subsector, save for any hawkish directional news Inflation is most likely to come out higher in June 2023 than for May 2023, thence we anticipate a stay or reduction in the Monetary Policy rates.
“We expect the market to sustain a slower bearish momentum in this current week, especially in high cap stocks pending further directional news”, the experts added.
Based on the expected bearish sentiment in the bourse, the Bancorp Securities’ analysts still recommended NESTLE for buy by investors in view of the stock’s good fundamentals but advised that investment in LAFARGE (WAPCO) and NIGERIAN BREWERIES, both blue chip stocks, should be put on hold in view of the prevailing fiscal and macroeconomic indices.
However, they noted that based on the management’s projection in 2023, Lafarge Africa expects good demand momentum and it plans to continue to maximize volume opportunities across its markets and actively manage its costs just as the researchers expect that once macroeconomic environment is stabilized enough as it relates to inflation and foreign exchange, the NIGERIAN BREWERIES stock is low enough for a good entry point.
