Nigerian Stock Exchange Analysts optimistic of market rebound on improved earnings
Contrary to the significant buying activities witnessed in the previous weeks, the local market was largely dominated by the bears during the week, occasion by profit taking action in major highly capitalised stocks ahead of the Easter holiday.
The market opened for four trading days last week as the Federal Government declared April 2 (Good Friday) public holidays to commemorate the 2021 Easter celebrations.
The influx of 2020 full-year numbers were not enough to impact the market positively as MTNN price depreciation and profit booking in banking stocks dragged the All Share index down.
Consequently, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) and market capitalisation depreciated by 0.76 per cent to close the week at 38,916.74 and N20.361 trillion respectively.
All other indices finished lower with the exception of NSE Mainboard, NSE Pension, NSE Insurance, NSE AFR Div Yield, NSE MERI Value and NSE Consumer Goods Index, which appreciated by 0.06 per cent, 0.78 per cent, 2.82 per cent, 2.64 per cent, 1.82 per cent and 1.93 while the NSE ASeM Index closed flat.
However, analysts said despite mixed and bearish outlook of the market, some sectors have continued to show improved performance, judging from their recent numbers, as revealed by the strength of supply and demand.
They expressed optimism that the downtrend may not linger with the expected reaction to dividend news and corporate actions of companies that released their 2020 scorecards.
According to them, the earnings news and dividend payout by companies will trigger buying interests as investors rebalance their portfolios for the second quarter, whilst keeping an eye on the movement of yields in the FI market.
Analysts at Codros Capital, said: “Heading into the second quarter, we expect investors to rebalance their portfolios based on an assessment of corporate earnings released during Q1-21 whilst keeping an eye on the movement of yields in the FI market.
“Considering that the FY 2020 earnings season has run its course, we now expect investors’ sentiment to be influenced by developments in the macroeconomic landscape and corporate actions.
“Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings.”Investdata Consulting Limited, said: “The prevailing trend after a correction is normal, as the full-year earnings season winds down, ushering in the 2021 Q1 reporting season, even as the changing momentum in the face of […]