Chinwendu Obienyi
Stock market investors should expect profit taking in some trading sessions at the Nigerian Stock Exchange (NSE) for the month of November.
This was the prediction of some analysts after a careful assessment of market trends, as as they foresee a sustained low yield environment and expansionary monetary policy stance that would make the Nigerian stock market more attractive in the face of the controversial US general elections. Profit-taking is the act of selling securities in order to lock in gains after it has risen appreciably. While the process benefits the investor taking the profits, it can hurt others by sending shares of their investment lower, without notice. In an emailed note obtained by Daily Sun, analysts at United Capital Plc, said, “This month, with a sustained low yield environment and a rather expansionary monetary policy stance, the stock market will remain attractive for investors seeking high returns. However, we do not rule out intermittent profit-taking by participants during the month. In all, we continue to see further uptick in share prices of tier one banks, food processors, agro-allied companies, cement makers and the Telcos.We advise investors to take cautious positions in the brewers, diversified consumer goods companies, and tier-two banks as they remain highly speculative.”
In the same vein, Managing Director, Highcap Securities Plc, David Adonri, noted that the reaction by investors wasjust for the moment and it is normal because there are days when the market goes up and then comes down.
“We have seen some profit taking because the macro-economic forces that propel the market are still existing. Liquidity is very high at the moment in financial economies because of the low absorbing capacity of the real sector here. So we are likely going to see some form of profit taking until the alignment of the forces is seen in the financial economy that will balance both the debt and equities market.” Adonri explained. Daily Sun investigations reveal that following the N1.93 trillion gain in the previous trading month, transactions on the domestic bourse have started the new month with mixed sentiments. For instance, the NSE All Share Index (ASI) fell by 0.01 per cent to close Thursday’s session at 30,738.92 points while market capitalisation decreased by N6 billion to close at N16, 062 trillion.