The partially government owned Botswana Telecommunication Corporations Limited which has seen its stock crawling down in the early months of 2018, now seem to be turning corner finding its feet.
The selling pressure on BTCL shares which has been prevailing since the begging of this year has dissipated since the begging of May with the market for BTCL shares shifting into a ‘sellers’ market.
As a result, BTCL recovered by 8.8 percent to close the week at 111 thebe due to more buying from investors, the Motswedi Securities weekly report revealed.
The company, housed at Megaleng in the heart of the city, has had its share price falling more than 40 percent since beginning of the year, leaving investors scratching their heads wondering what could be the reason to the price drop.
As this was for the first time; BTCL share price fell from a high of 135 thebe back in April 12th 2016 to a low of 84 thebe on the 16th of August 2016 due to selling pressure. This selling pressure at that time changed overnight after the release of BTCL financial results and this attracted investors with the market turning into a sellers’ market overnight.
Motswedi Securities financial analyst, Garry Juma is of the view that, the sudden change in the fortunes for BTCL shares comes at no surprise as the company selling pressure was not based on any fundamentals. He however pins this to profit takes and to some extent retail investors offloading their shares to meet their obligations.
In addition he indicated further, “BTCL upward momentum was always expected as the selling pressure was not backed by any fundamentals. It was due to profit taking and to some extent some panic selling from retail investors.”
With BTCL now expecting its results for the year ended 31 March 2018 to be out before the end of June 2018, value based investors are now taking advantage of the current lower price to acquire the stock.
Over the last couple of months of the beginning of the year, investors’ confidence has not been at ease, some were filled with uncertainty on their investment buckets as the share price continued to tumble at an alarming rate.
But then again, investor’s sentiments towards a stock can have a positive or a negative effect on its performance.
Juma explains that, sometimes negative sentiments even if they are not backed by any fundamentals can sway investor’s perception over a stock and BTCL is not immune from this. “Over the past few days we have seen investors warming up once again to BTCL and this is contributing to the upward momentum. We expect BTCL shares price to continue on the recovery mode as we move towards the release of the financial results. If the financial results come out stronger than expected with a good dividend payout, we expect the buying momentum to accelerate further even after the release of the financials.”