Stock Market Reverses Gains as Investors Book Profits
The stock market closed last week on negative note as the positive sentiments of the previous week could not be sustained.
The pullback followed profittaking in blue-chip stocks, especially in banking and consumer goods sectors by some investors.
As a result, the Nigerian Exchange(NGX) Limited All-Share Index (ASI), which appreciated by 1.47 per cent two weeks ago, fell 0.57 per cent to close at 37,994.19, while market capitalisation shed N123.7 billion to be at N19.796 trillion last week.
However, the slowdown in momentum or correction, according to the analysts at InvestData Consulting, has created opportunities, for discerning investors to reposition in interim dividend paying stocks.
The analysts said there was no need to panic at this point because profit-taking is an integral part of stock market dynamics anytime, to drive oscillation that creates room for entry and exit.
“So investors and traders should not be carried away with any rally or rebound, but be guided by their investment objectives, while taking profit immediately reasonable profit targets are met (say 15-20 per cent) while keeping an eye on the preset stop-loss,” they said.
The analysts added that they expect a mixed trend, on profit-taking and repositioning for half-year earnings reporting season kicking off any time soon after forming a wave that supports an uptrend as bargain hunters take advantage of pullbacks to reposition ahead of second quarter (Q2) numbers.
Looking ahead, InvestData said: “Again, the way to go is target dividend-paying stocks and fundamentally sound companies with growth prospects in 2021, looking the way of mispriced equities ahead of interim dividend announcement. “This is especially given that despite the seeming improvements, fixed income yield continues to offer a negative real rate of return due to the galloping inflation.
“However, the strong and faster recovery may continue, depending on market forces, going forward, as propelled by expected Q2 earnings