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Market sentiment may worsen this week – Analysts

By Nkiruka Nnorom

STOCK analysts have said that the huge sell-off witnessed in the market last week will continue this week after the major equities indicator – the All Share Index (ASI) dropped below 30,000 basis points.

According to them, the market requires a positive trigger to come out of its present state.

Stockmarket

At the end of transactions last week investors lost N547 billion, as the market capitalisation slumped to N11.124 trillion from N11.672 trillion, while the ASI dropped by 4.6 percent to 29,616.38 points, a development analysts attributed to unimpressive earnings releases by most of the corporates last week.

In their projections, analysts at United Capital Plc said that they do not expect equities to continue to weaken except the fundamentals move in the unfavourable direction.

Naira appreciates to N360.30/$ in I&E

“On one hand, we do not expect equities to continue to weaken unless fundamentals move in an unfavorable direction. On the other hand, though the market is clearly mispriced on both a fundamental and technical perspective, a near-term recovery in equities would only be spurred by a catalyst,”they said.

They listed some of the positive triggers to include expected listing by MTN and favourable oil price trends, saying that until these events materialize, sentiments could continue to remain choppy.

Also, analysts at Afrinvest Securities, said: “Despite the overall negative performance, we observed increased buying activity on bellwether stocks, and we expect this trend to be sustained in the coming week as investors seek to take position in attractively priced stocks. However, in the absence of major triggers that could drive positive sentiments, we maintain a bearish near-term outlook.”

Analysts at Cordros Capital also shared the view, but extended a word of caution to investors in the absence of a positive catalyst.

Meanwhile, breakdown of activities last week showed that performance was bearish across all sectors. The consumer goods sector declined the most on sell-off in Beta Glass (-18.9%), Dangote Flour Mill (-16.2%) and Unilever Nigeria Plc (-10.3%). The banking sector trailed behind with 6.1 decline following losses in UBA Plc(-19.5%), Ecobank Transnational Incorporated (-12.1%) and Access Bank Plc (-11.6%).

The industrial goods, insurance and oil and gas sectors fell by five percent, 3.9 percent and 2.4 percent respectively.

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