Profit taking hits NSE deals

PHOTO | DIANA NGILA Oil dealer Total led the gainers’ list during trading at the NSE.  NATION MEDIA GROUP

By JOSHUA MASINDE

In Summary

• Many investors dispose of their stocks following a good rally over the past two weeks that witnessed high returns
• Continued profit taking on most counters slowed down the performance of the stock market for much of last week as some companies released their financial results.
  
  Analysts said many investors were disposing of the relatively well-priced counters in the wake of a stock market rally two weeks ago on expectation of a slowdown or a price correction.
  
  According to NIC Securities equity analyst Faith Atiti, profit taking across the large cap counters continued to weigh negatively on the market following a market rally, the release of results on some counters, and expectation of better results on some of the companies looking to release their earning figures in coming weeks.
  
  “Most stocks have sunk further into the red on increased supply from locals. While profit taking has been the main driver for supply, caution ahead of the March poll has limited general support for equities,” Ms Atiti told Smart Company.
  
  During trading on Thursday last week, the market saw the biggest one-day decline this year as the NSE 20 index fell by 1.06 per cent to close at 4,502.75 points.
  
  Some of the counters that released their results in the past two weeks include Barclays Bank, Housing Finance, NIC Bank, East African Breweries Limited (EABL), and Pan Africa Insurance.
  
  During last week’s trading, the large cap counters weighed down the NSE 20 Share Index by 3 per cent to 4,477.89, down from 4,614.75 points a week earlier. Equity turnover climbed 6 per cent on week-to-week to Sh3.5 billion ($40.62 million), mostly driven by increased foreign investor inflows.
  
  According to Standard Investment Bank, strong foreign investor demand pushed EABL to the top mover slot during the week, accounting for 30 per cent of traded volumes. In the half-year period ending December 2012, the brewer announced a 14.45 per cent drop in net profit to Sh3.7 billion ($43 million) and later followed by an announcement that the company’s group managing director, Devlin Hainsworth, is scheduled to resign at the end of March.
  
  “The brewer started the week on a low note extending its previous week’s losses, subsequently recouping some its losses towards the end of the week to close at Sh280,” Standard Investment Bank analysts said in their weekly analysis.
  
  On the banking counters, Kenya Commercial Bank (KCB) and Equity Bank continued to witness profit taking, declining by 1.4 per cent and 4.5 per cent respectively ahead of the announcement of full-year 2012 results expected in coming weeks.
  
  “More results, especially from the big banking counters, will give us a good indication of how the sector is performing,” Kestrel Capital research analyst Kuria Kamau said, adding that some of the counters to watch this week include KCB and Scangroup.
  
  Oil dealer Total Kenya, on the other hand, led the gainers’ list, rising 9.4 per cent to Sh15.15, albeit on light trading. Pan Africa Insurance touched a new 12-month high of Sh48 following a 57 per cent year-on-year rise in earnings per share as at the end of 2012.