Profit-taking may reduce gains this week 'Analysts

The appreciation recorded in equity trading activities on the Nigerian Stock Exchange last week is not likely to be sustained till the end of the year, analysts have said.The analysts based their prediction on the fact that profit-taking activities may likely set in at the market in the remaining three trading days of the year, and run into the New Year.According to them, with the profits garnered in the stock market within the last two weeks, it is only natural for speculative investors appetite to be aroused towards cashing in on the gains recorded.They noted that for the first time in a long while, the market closed on a positive note for two consecutive weeks, hinting at evidence that investors would try to take profit.Analysts from Vetiva Capital Market Limited noted in their report for the week ended December 23, 2011 that the gains in the market were not likely to be sustained.They said, Strong runs in the financial services and consumer goods stocks boosted the market over the past week against general expectations.We associate the past weeks gains to position-taking for next year; thus, we expect soft profit-taking to temper the gains next week, with the market likely to close as about 15 per cent down for the year.They, however, noted that all things pointed to the fact that investors were likely to be in for a better deal next year, with a possibility of receiving good earnings.Whilst at this stage, it is difficult to predict the exact future course of events. We have greater confidence about long-term outcomes than the current short-term performance of equities. We believe that despite the current risky investment climate, investors will be well rewarded for taking risk, given that stocks on the Nigerian bourse are at levels we may not see for some time to come.At the close of trading activities on Friday, the market capitalisation of the 186 listed equities closed at N6.543tn, representing a rise by N302bn or 3.3 per cent, from N6.514tn recorded on Monday.The NSE All-Share Index also rose by 3.6 per cent or 517.95 basis points to close on Friday at 20,763.36 points, up from 20,045.31 recorded a week earlier. The NSE 30-Index was up by 0.5 per cent or 5.04 basis points, from 926.72 points to 931.76 points.The previous week, the NSE All-Share Index and the NSE-30 Index had appreciated by 1.2 per cent and 1.5 per cent, respectively.Analysts from Proshare had noted that the appreciation recorded in the last two weeks was as a result of investors, who were taking positions for expected corporate actions of companies.
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