According to this week's analysis, there has been a forecast that the current bearish trend, which lasted last week, will continue this week as investors look for coverage in fixed-income instruments following forthcoming dividend payments.
Last week, trading at the Nigerian stock market revealed the first significant loss in over 16 weeks, where the market dominated in the bullish/Santa Claus run. This loss increased sales sentiment among investors who traded in local stocks in the country. The reason why many investors dive into selling equities is to rebalance themselves and safeguard their portfolios.
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The LEADERSHIP says, as I quote, "This adjustment precedes the expectations set for the Monetary Policy Committee (MPC) meeting this month and follows the recent surge in treasury rates to a nearly seven-year high. This portends that the Central Bank of Nigeria (CBN) is signalling a return to orthodox monetary policy tools to curb inflation, and the move to entice foreign investors back into Nigeria's economy adds to the backdrop."
What Analysts From Cowry Assets Management Limited Are Saying
- The current bearish trend persists as investors seek refuge in fixed-income instruments due to the recent high yields seen amid dividend expectations and increased market volatility ahead of the January Consumer Price Index (CPI) data from the NBS and the impending Monetary Policy Committee meeting this February.
- However, a pullback at this juncture is expected to strengthen upside potential. Amidst all these, we continue to advise investors to take positions in stocks with consistent track records of dividend payments and solid fundamentals and growth prospects to support earnings growth.
- We expect bear sentiment to continue as investors run for safety in fixed-income instruments due to high yields in the face of dividend expectations and volatility ahead of January CPI and upcoming policy meeting, while pullbacks at this point will add more strength to upside potential. As such, investors should take advantage of price correction. They are also looking at trends and events globally and domestically.
A Look At Friday Trading Session Last Week
Last week's trading session closed negatively following profit-taking activities that ruled the market following weak market breadth. Market capitalisation was down by N1.42 trillion to close at N55.735 trillion.The NGX All-Share Index dropped by 2.45% week-on-week to close at 101,858.37 points.
The NGX Banking and NGX Industrial indices led the losses to decline by 6.86% and 4.16%, respectively. Also, NGX Insurance, NGX Oil & Gas, and NGX Consumer Goods indices recorded a weekly loss of 1.48%, 0.40%, and 0.14%, respectively.
Read more: https://www.investingport.com/ngx-m...run-this-week-as-investors-look-for-coverage/