The Kenyan equities market is expected to sustain a positive sentiment after a three-week rally in banking sector stocks.
The bourse is expected to sustain its gains in the days ahead as investors expect a repeal of the interest rate cap.
“The rally in stocks last week suggests that investors have priced a high probability, almost a fait accompli, that the interest rate cap will be repealed,” according to Analysts from the National Commercial Bank of Africa.
Last week, the NASI, NSE-20 and NSE-25 gained 9.4%, 9.8% and 13.2%, respectively week on week.
“Market activity continued being strong, posting a turnover of Ksh 7.4Bn compared to a turnover of Ksh 4.0Bn in the prior week,” said Genghis Capital Analysts.
The foreign investors accounted for 51.8% of the week’s total activity, compared to 64.8% in the previous week. Foreign investors were net sellers for the fourth consecutive week, logging net outflows of Ksh 76.4Mn compared to a net outflow of Ksh 266.4Mn in the previous week.
In October, according to Cytonn Investments, NASI, NSE 20, and NSE 25 increased by 9.7%, 8.8%, and 13.0%, respectively.
The increase recorded in NASI was driven by gains in large-cap bank stocks such as NCBA Group, Equity Group, and KCB Group, which gained by 30.7%, 24.2%, and 23.2%, respectively.
For this week, Genghis Capital analysts are expecting activity to remain on the index counters with trading dominance by the foreign investors in the coming week.
“Looking ahead, trading is expected to remain vibrant although some mild correction may be imminent on profit-taking as well as price rationalization as investors assess potential other ways that Parliament may try to impose control on credit pricing,” Analysts from the National Commercial Bank of Africa.