Capital market analysts have said they expect equities to build on the recent positive momentum this week.
“We expect the NSE ASI to bounce back into the green at week open, considering the positive market breadth across the week and investor appetite in the financial services and consumer goods sector,” analysts at Vetiva Capital Management said.
In the fixed income space, however, the analysts said they expected cautious trading ahead of the Monetary Policy Committee meeting on Monday and Tuesday.
This, according to them, is because the markets are awaiting direction on interest rates and the exchange rate, at least in the near-term.
“We expect the policy rate to remain unchanged at 13 per cent,” they said.
The Nigerian Stock Exchange All-Share Index and market capitalisation had appreciated by 2.17 per cent last week, closing on Friday at 30,332.68 basis points and N10.425tn, respectively.
It was a generally positive week as all NSE indices closed higher with the exception of the NSE Alternative Securities Market Index, which closed flat.
Analysts at Meristem Securities Limited noted that last week’s performance made it the third consecutive week that the equities market had stayed in the positive zone with the NSE ASI “returning positive on three of five trading days.”
They also observed that market breadth had tilted largely in favour of advancers, as 58 stocks appreciated while 22 stocks declined last week. Volume traded, however, declined by 1.75 per cent, while market turnover advanced by 2.62 per cent.
On the outlook for the coming weeks, the Meristem analysts said, “We expect the Monetary Policy Committee meeting in the coming (this) week to determine the direction of trades, even as we anticipate the ministerial list and economic blueprints of the government.”
Following a sectorial review of the stock market last week, they noted that the banking sector closed on a positive note; with the MERI-BNK Index advancing by 5.22 per cent to bring the sector’s year-to-date return to -6.59 per cent.
They also observed that the Treasury Single Account initiative was fully implemented last week, with a reported estimate of N1.2tn leaving the financial system.
“Based on the CRR of 31 per cent, there is expected to be a refund, while our expectation of a revision of CRR to 20 per cent will result in a net outflow of N40bn. This means that we do not anticipate any long-term effects on the operations of banks, although we do not discount lingering effects in the short-term,” they added.
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Source : Punch