Capital market analysts have said they expect investors to cash in on the recent gains made by equities this week.
“Riding on recent gains, investors were quick to cash in; we expect selling pressure to continue into the new week,” analysts at Vetiva Capital Management Limited said in their market commentary for the week ended June 6, 2014.
They observed that at the monthly bond auction scheduled to hold on Wednesday, the Debt Management Office would be offering a total of N70bn across the 13.05 per cent FGN AUG 2016 (three year re-opening) and 14.20 per cent FGN MAR 2024 (10 year re-opening) instruments.
“Ahead of the auction, we expect sideways sentiment in the secondary market as traders look to auction stop rates to guide trading,” they said.
On the performance of the equities market last week, the Vetiva analysts said, “Gains moderated on the Nigerian Stock Exchange at week open with the All-Share Index edging up only slightly by seven basis points. Pockets of weakness were noted in specific sectors with the index down on Tuesday.
“However, an announcement by the Lafarge Group to consolidate its interests in its Nigerian and South African businesses into a single entity – Lafarge Africa Plc, spurred a rally in the Industrial Goods sector.”
This, they said, pushed, the NSE ASI “further north, on the back of price appreciation in Lafarge Cement WAPCO Nigeria Plc and Ashaka Cement Plc – which touched year-to-date highs of N124.02 and N28.64 respectively on Wednesday. Following recent gains however, investors were tempted to take profits as the equity market dipped 14bps and 10bps on Thursday and Friday, but still mustered a 0.13 per cent week-on-week gain.”
Meanwhile, analysts at Meristem Securities Limited have said that most stocks on the NSE were trading below their fundamental price.
In their latest ‘Investment Guide’ they explained that the mood in the stock market appeared tempered last week due to profit-taking activities by some investors, following an enthusiastic month of trading.
They said, “Analysis of the All Share Index trend in 2014 shows oscillatory movements in price characterised by mild peaks and profound troughs largely due to rapid profit taking by investors following slight gains in stock prices.
“Based on our Sectoral analysis, most stocks on the exchange are trading below their fundamental prices and therefore portend considerable upside for the overall market.
“Going by past trends however, perceived activities of profit-takers in the coming weeks may surface, thereby affecting the mood of the market whilst medium to long-term investors may also possibly begin to take positions ahead of half year result releases thus neutralising the impact of profit-takers.”