By Peter Egwuatu
Investment analysts have indicated that oil price rally may drive a major rebound in equity prices this week ahead of third quarter 2021, Q3’21, earnings season.
Oil prices had risen significantly hitting a two-month high at the international market last week trading above $77 per barrel.
This is coming as the Nigerian Exchange Limited, NGX, squeezed out a marginal gain last week despite profit-taking transactions, as the All-Share Index ended the week 0.1 per cent higher at 38,962.28 points.
Gains in Okomu Oil at 5.6 per cent, following renewed investors’ interest, offset the declines in Zenith Bank -1.3 per cent and Guaranty Trust Bank, GTCO -0.9 per cent last week.
Activity levels on the Exchange were stronger as traded volume and value surged by 49.5 per cent and 28.2 per cent Week-on-Week, WoW, respectively.
Consequently, the Month-to-Date, MtD, and Year-to-Date, YtD, losses moderated to -0.7 per cent and -3.2 per cent, respectively.
Performances across sectors were mixed, with the Insurance index rising by 1.7 per cent and Oil and Gas index by 1.4 per cent, while the Banking index declined by -0.4 per cent . The Consumer Goods and Industrial Goods indices closed flat.
Reacting to the market development, analysts at InvestData Consulting Limited said: “We expect the rebound in oil price and calm returning to the global market after China had called on property company, Evergrande, to pay its debts and avoid default, just as investors and traders take advantage of shakeout to position ahead of quarter-end and Q3 earnings reporting season.
‘‘Also noteworthy is the fact that many stocks are trading within their buy ranges, a situation expected to attract funds into the equity space, given the dividend yield capable of serving as a hedge against inflation.”
In their own comment, analysts at Cordros Securities Limited said: ‘‘We expect savvy investors to take advantage of the moderation in the share prices of bellwether stocks to make a re-entry in the week ahead.
‘‘However, we expect intermittent profit-taking activities to persist as investors search for clues on the direction of yields in the Fixed Income, FI, market. Accordingly, we think the market will exhibit a choppy pattern. ‘‘Overall, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a