As trading resumes on the Nigerian Stock Exchange (NSE) Tuesday, the first market day of the year, investors are brimming with high expectations and fresh strategies for the new year.
Trend analysis shows that some investors would be divesting from moribund companies, while the banking sector will generate more bids, as dividend-savvy investors buy in expectation of high dividend payment from the subsector.
This falls in line with analysts’ forecast that the year’s first quarter will attract high activity and bullish trade, leading to high equity price appreciation by companies hitherto trading at low. Ongoing high demand for banking stocks is expected as trading resumes in continuation of the last trading session which saw OMOSAVBNK and Guaranty Trust Bank accounting for the bulk of trades with 50 million and 33 million units respectively.
Analysts however advise investors to go for gradual building of positions in blue-chips, especially for investors with a medium to longer term horizon.
Recall that Nigerian equities rounded off the year on a positive note, as the NSE – ASI recorded a marginal gain of + 0.34 percent, bringing the end of 2016 (YTD) return to -6.17 per cent.
The year-end trades were principally influenced by buying brewing companies and banking stocks.
For instance, Nigerian breweries grew by +138.28, Guinness +13.37 while Access Bank appreciated by +7.58. These upticks hedged the negative impact of declines in Forte Oil (FO), Zenith Bank and Mobil.
Through the year, the All Share index (ASI) ranged from 22,456.32 to 31,071.25. It however, closed at 28,642.25, shedding -1767.63pts on annualized basis, with a corresponding market capitalization of N9.25 trillion.