NSE shake-out : Buy the dip?

Weak longs capitulating on this sell-off may well see this as a missed buying opportunity a month, or year from now.

The NSE was the worlds worst performing index today, according to Bloomberg data.

The reason for the sell-off can be boiled down to two things: currency risk and Central Bank regulatory actions that may hurt lenders profits.

The CBN has come out today to vow naira defense.

This may take the first variable (currency risk) off the table, however it may exacerbate the second, if the CBN tightens the screw further on liquidity (in a bid to defend the currency peg), which may further hurt lenders profits.

So what is the play for investors?

Selective stocks selling at a bargain would be the way to go.

GTB (Guarranty Trust Bank) at N24.7 looks like a steal. Investors may want to start nibbling a little on what is perhaps the best in class banking name in Nigeria today.

Dangote Cement has behaved well since the sell-off began, and at N234.7 is just off its all time highs.

If you are already in this name do not sell this one cause its going much higher.

The market selloff may persist for a while though , but investors that buy solid company's that provide essential services or goods will come out of this smiling.

Disclosure:  I own Dangcem and GTB stock in my personal portfolio.