By Udeme Ekwere

Tuesday, 22 Feb 2011

Investors in the capital market have been urged to take position in good stocks on the Nigerian Stock Exchange ahead of the release of some companies’ financial results.

Analysts, who gave the advice, said there was bound to be improved activities in the market in the next few weeks.

They, therefore, advised investors to take position ahead of the expected rally.

According to them, the improved activities are as a result of positive reaction of the market to the declaration of huge dividends by some blue-chip stocks, such as Nestle Nigeria Plc, which declared a dividend payout of N10.60 per share.

The result, which was released on Friday, spurred increased market activities as the market capitalisation of the listed equities, on Monday, increased by N22bn or 0.26 per cent to N8.537tn, from N8.515tn recorded on Friday.

Also, the NSE’s All-Share Index rose by 69.97 basis points or 0.26 per cent from 26,639.35 to 26,709.32 points, while the NSE-30 Index gained 3.06 points or 0.3 per cent, up from 1,166.72 to 1,169.78.

In their report on Monday, analysts at Meristem Securities Limited said that it was expected that the rally, which began in the market last Thursday, might continue to the middle of the week, adding that the strong earnings declared by companies in the next few days would, however, assist to boost market activities.

They said, “We expect the appreciation witnessed in the last two trading sessions of the week to continue till mid-week before profit taking sets in. However, we still maintain that the attractive rates and yields in the fixed income market may slow down growth in the equities market until quoted companies declare strong earnings in addition to good dividend and bonus.

“Investors should take medium – to long-term positions in the stocks that have good fundamentals rather than investing for speculations. We note that there are select opportunities in the banking, building materials, food and beverages, conglomerates and petroleum marketing subsectors of the market.”

To analysts at Vetiva Capital Market Limited, the three-week consecutive loss in the market suggests a positive trading in the week ahead, as prices become more appealing.

They said, “We believe that the attractive results from some big companies will further incite investors to take a deeper look at price opportunities ahead of banks’ earnings releases, which we expect in the second and third week of March.

“The expectation of improved earnings from companies (such as the banks and the food/beverages sector) may actually drive activities in the coming week, even as company’s scorecards begin to trickle in.”

 

Source: Punch