Experts caution investors on market appreciation

By Udeme Ekwere

Tuesday, 19 Oct 2010


Investors in the capital market have been urged to be cautious in their transactions in the coming weeks.

This advice, given by market analysts, is coming on the heels of the recent rallies recorded in the Nigerian Stock Exchange in the last one week.

Specifically, the market capitalisation of the 199 listed equities recorded an increase of N369bn or 6.3 per cent from N5.82tn on October 8, 2010, to close at N6.19tn on Monday.

Similarly, the NSE‘s All-Share Index closed at 25,278.23 points, representing a 6.3 per cent or 1,505.83 points increase.

According to analysts from Meristem Securities Limited, even though a lot of things seem to boost investor-confidence in the market at this time, it is still important for investors to be cautious.

They noted that there might be some speculative activities in the market at this period, as short-term investors might want to cash in on the gains recorded in the market.

According to them, ”Following the twin-week rally of 3.13 per cent and 5.49 per cent respective bull-run, we perceive profit-taking as fragile investors look poised to harvest gains.

”While we still see a handful of stocks with appreciable returns potential over the next six-months, we suggest a cautious tread to avoid being victims of the perceived harvest week.”

They, however, noted that with the announcements of the expected purchase of the toxic assets of banks by the Asset Management Corporation of Nigeria, as well as the disclosure of the merger and acquisition bids of the rescued banks, there should be some level of stability in the market.

Analysts from First Securities Discount House in their outlook for the week, noted that with the anticipated release of the third quarter results of some banks and companies, the positive outlook would continue.

According to them, ”We expect investors‘ renewed interest in the market to continue, as we approach the season for the release of third quarter unaudited results of quoted companies.”

Source: Punch

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