By Udeme Ekwere

Experts have advised investors to take advantage of the current downturn in the market to make future profits.

The advice follows the persistent losses recorded in equity trading activities on the Nigerian Stock Exchange since the end of January, 2011.

The analysts said that the low prices of shares and the reduction of major indicators in the Nigerian capital market should be an attractive factor to investors with a long-term view in the market.

The market suffered its greatest weekly loss all year as major sectors declined steadily.

The NSE’s All-Share Index hit a height of 27,797.39 points on January 25, but had since then been recording significant losses. This week alone, the NSE’s All-Share Index lost 2.5 per cent or 65.90 basis points from 26,016.84 on Monday, to 25,357.84 points.

The market capitalisation of the listed equities also dipped by 2.5 per cent or N211bn to N8.105tn on Friday, down from N8.316tn on Monday. It hit a peak of N8.885tn on January 25.

Other market indices were also not left out as the NSE-30 Index fell by 32.18 basis points or 2.8 per cent from 1,138.79 points on Monday, to close at 1,106.61, while the NSE Banking Index featured regularly at the bottom of the market, dropping by 2.6 per cent to 413.08 from 424.20 at the beginning of the week.

According to analysts at Vetiva Capital Management Limited, this is the right time for investors with a long-term perspective to invest in the market, following the significant low-prices of shares.

“On the bright side, inklings of encouraging results to come leave some hope of a mild recovery in the near term, and so, investors may take the current low prices of stocks as opportunities to take positions for a potential rally and proposed dividend payments. We expect upticks in demand to soften the losses this week,” they stated in their report for the week ended March 4, 2011.

For instance, Nestle Nigeria Plc, which was trading at N460 per share as at Monday, lost N18.95 or 4.12 per cent this week, to close at N441.05 per share.

Dangote Flour Mills also lost 17.36 per cent or N3.28 to close at N15.61.

Other stocks that recorded significant price losses included Nigerian Breweries Plc, which shed 3.3 per cent; Nigerian Bottling Company with a loss of five per cent and Dangote Cement Plc, which recorded a 1.6 per cent decline.

The Managing Director, Lambeth Trust and Investment Limited, Mr. David Adonri, noted that some positive trend might be recorded in the market this week, as the market had bled heavily in the past week.

“It is clear that activities may begin to record some positive results. This is because the market has hit a resistant point, after which the only way for it to go will be upwards,” he told our correspondent on Saturday.

For analysts at Meristem Securities Limited, despite the heavy losses recorded lately, the equity market remains a potential profitable window for investors.

 

Source: Punch