EQUITIES market will experience another spate of sell-off this week despite attractive valuations, financial analysts have said.
Some analysts had said that relative to recent quarters, the price-earnings (P/E) ratios and price book value (P/B) valuations indicate the market is currently undervalued at current prices and advised for a buy.
However, at the close of transactions last week, the market took a further downward move, resulting in 0.44 percent decline in the All Share Index, ASI, and the market capitalization to 32,058.28 and N11.704 trillion respectively. Meristem Securities, an investment banking firm, said that increased debt offerings, the rising yield in the fixed income market and mounting political uncertainties had driven most investors to seek less risky and high yielding instruments.
Explaining the negative last week, the firm observed that there was a switch by investors in their investment class due to the primary market T-bills auction and the Eurobond book building, which took place on Thursday.
Nonetheless, analysts at the firm said that some of the sectors, including the banking, oil & gas and the industrial goods sectors, will sustain the buying pressure experienced at the end of the trading session on Friday.
Analysts at Cordros Capital and cowry Asset Management also reiterated a negative outlook for the equities market in the absence of a positive market trigger. According to Cowry Asset Management: “The NSE ASI will close in red territory amid sell pressure by speculators despite the attractive valuations and dividend yields.
However, we reiterate that buy opportunities would linger, at least in the near term, thus availing value investors good bargains.” Meanwhile, three of the five sectors (banking, insurance and oil & gas sectors) recorded negative returns last week, while consumer goods and industrial goods sector appreciated by 0.04 percent and 1.02 percent respectively.