Hunt for Undervalued Stocks to Dominate Market

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By Modupe Gbadeyanka

It is no doubt that the year 2018 has been very turbulent for the Nigerian stock market with many stocks underperforming unlike in the previous year, when the local bourse recorded a 42.30 percent growth.

As at the close of business on Friday, December 28, 2018, the Nigerian Stock Exchange (NSE) recorded a year-to-date loss of 18.84 percent, a very sharp contrast of its 2017 performance.

With investors going into the market today for the last time in 2018, many of them can only hope to have a better 2019.

However, with the election uncertainty at the back of their mind, the first three months of next year look bleak, especially with the warning signals. Investors will only want to observe happenings from the sidelines.

But one thing is certain, as investors go into the market this week, they will continue to shop for some undervalued stocks to add to their portfolios and quickly offload when considerable gains are made.

This view was echoed by analysts at Cowry Asset, who said, “In the new week, we expect the NSE All Share Index to marginally close in green territory as investors, especially portfolio managers, hunt for undervalued stocks to cut down on their average prices or add new stocks to their portfolios cheaply.”

Also giving their views on the market outlook this week, analysts at Vetiva Research said, “With investors likely to continue to take positions on the final trading day of the year, we expect a positive session to close out the year and anticipate heightened activity levels.”

For analysts at Business Post, “We are of the view that while some investors will hunt for undervalued stocks with good dividend yields, others will in panic want to jump out of the bus to return in the second quarter, when the presidential poll should have been concluded and winner announced.”

“We also expect more activities around the tier-2 banks this week. The market is likely to slightly end in the green territory at the close of business this week.”

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