The NSE 20 share index, which is used as measure of the activity and
strength of the market, has been on a seesaw between 4,600 points and
above 5,000 points since January.
The question arise- Are we in a technical bear market or not?

Key factors that have contributed to this decline are:-

o The notion by most retail investors that quick money is made our capital
market is misplaced. This has led to a huge supply in the market against
very small margins in demand. A number of these investors have panicked
over the market performance making them rush to sell their shares,
therefore tumbling the market.

o Depleted disposable income as a result of post-election violence. I mean
the negative impact caused by the inflation (31.5 percent), resulting to
high cost of living .Most retail investors has turned to selling their
stocks for cash to cater for their livelihood.

o There are some banks that have increased their base lending rates (from
13 percent to 16 percent). This has made situation complicated to
investors who took loans to finance their purchase of the stocks.

o Introduction of 40 billion shares of mobile service provider (Safaricom)
created a significant imbalance in the index. Safaricom shares represent
about 60 percent of the total market share. Any slight drop in pricing of
its shares equally registers significant effect on the index.

Reality or perception?

The market fundamentals (economy) are still in place. There is a huge
disconnect between what actually happened at the companies and the
reflection of share prices today. I cannot comment the status of
agricultural sector (fundamentals) but the rest of the sectors in the
bourse are in-tacked.
It should be appreciated that, although there has been a dampened spirit
at the bourse, some counters have defied that groom. E.g. EABL, KPLC,
Bamburi, Athi River just mention a few. In fact, Barclays, KCB, NBK are
strong stock to buy now not selling and their half-year results are a
pointer to that effect.

Keep it right here

regards

Symon M. Thuo

www.streamtech.coke 

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