Capital market analysts have said that there will be profit taking activities in the equities segment of the market this month.
This, they stated, followed the consistent upward movement in the equities section of the Nigerian Stock Exchange in the past few weeks.
According to them, with a year to date performance of over 34.60 per cent this year, activities in the market have reached a point where a lot of investors who fled the market have been returning.
The analysts however added that the positive response of investors to the equities market in the last few weeks indicated that such upward activities might not last long.
In their weekly money and capital report on Monday, analysts at FSDH Securities Limited noted that some investors would likely take advantage of the price appreciation of shares in the market to make some gains.
They added that it was possible that the prices of some shares would drop as a result of profit taking, adding that this was usual at this period of the year.
They said, “Based on historical trend between May and June, we expect the equities market to trade southward this month.
“In addition, the current share prices of select stocks at the bourse would continue to offer opportunities for profit taking in the course of the week, which will cause prices to drop.
“We, therefore, urge investors to consider stocks with solid fundamentals, as they prove capable of generating good returns in the medium to long-term.”
On a monthly basis, the NSE All-Share Index, which opened last month at 33,440.57 basis points, rose by 13.02 per cent or 4,354.18 basis points to 37,794.75 points at the end of the month.
Similarly, the market capitalisation of the listed equities rose by 12.9 per cent or N1.38tn to N12.075tn in May, up from N10.691tn recorded at the beginning of the month.
Analysts from Vetiva Capital Management Limited warned of the likelihood of profit-taking early this week, adding that, “following strong recent runs on the Nigerian stock market, investors may be tempted to take profits on key financial and consumer counters.”
Analysts from Meristem Nigerian noted that numerous opportunities still existed in the market, stressing that investors could tap into such opportunities for increased returns in the coming months.
“We see an opportunity in underpriced stocks with sound fundamentals which include a great proportion of the penny stocks which may raise the stock market’s total capitalisation further up, hence, we see significant potential returns in both the equities and fixed income markets,” they stated.