NSE goes live at The Stanley to spur investor interest

“We expect the market to remain firm at the current levels with marginal fluctuations as most banks are likely to report modest profits in the third quarter,” says the Sterling Investment Bank note.

Price rally

The expectation of a price rally is also given credence as some of the major counters are reporting better returns in the face of the ongoing depressed economy.

Stanchart returned a 41 per cent pretax profit for the third quarter.

At the close of trading Stanchart shares gained Sh4 to close at Sh146.

Similarly, Kenya Power and Lighting reported the highest profitability growth by posting a 74 per cent pre -tax profit.

Safaricom which released their half year results recorded a 3.7 per cent growth in operating profit to Sh9.9 billion from Sh9.57 billion for a similar period last year.

This is expected to refresh the outlook of the market in the days ahead possibly putting breaks to further price decline.

The increase involvement of foreign investors however, is read with caution as the market recovery cannot entirely be dependent of them.

“Whereas it’s critical to have foreign investors, it’s important to note that they use other none fundamental factors such as prevailing political environment to make their decision”, said Justus Agoti an analyst with Sterling investment Bank.

Mr. Agoti observes that as the country move toward the 2012 election foreign investors are expected to withdraw from the market only to return after the general election.

The ease of exit by foreign investors which can lead to rapid collapse of prices can only be checked by having more local investors to maintain liquidity and stability in the market.

In addition, most of foreign investors tend to concentrate on fewer counters which have prospects of higher returns.

Market analyst indicates that some of the most preferred counters are Safaricom, Equity Bank, East African Breweries and Athi River Mining.

Other counters keenly followed by these investors include Barclays Bank, Standard Chartered Bank, Jubilee Insurance and TPS Serena.