Russian stocks seen opening close to flat

MOSCOW, Jul 20 (PRIME) -- The Russian stock market is likely to start Thursday’s trading session little changed as the market lacks drivers for growth while there are no serious reasons for it to contract, analysts said.

Alexei Antonov, head of Alor Broker’s investment consulting department, said that the market may start the day with sideways movements as the trade data shows investor unwillingness to buy while there are no drivers for a serious downward correction.

“On Wednesday … the bulk of the blue chips fell, which means profit taking in almost all shares. Purchases of the shares that lagged behind the market is a concerning factor. For instance, Norilsk Nickel led the liquid shares and gained 1.3%. The security has been in the sideways channel since last autumn, and now it is trying to stay near the channel’s upper threshold,” Antonov said.

The low liquid shares of power companies experienced high speculative demand, Investors also bought mobile operator MTS and telecom giant Rostelecom, which were previously seen as defensive assets. This means that many investors are trying to find individual ideas instead of buying a wide range of securities. However, the market is yet to form an idea and find the drivers for a full-fledged downward correction, he said.

Bogdan Zvarich, senior analyst at financial platform Banki.ru, said that the MOEX Russia Index may ease at the beginning of trade because of the negative external background, but it would only be a very short-term decrease.

“The leading Asian bourses lost up to 0.2% with the Japanese market being an exception falling by 1.1% because of weak dynamics of exports. The futures for the main U.S. stock indices are mixed, and the closest futures for the Brent oil price consolidate around U.S. $79.5 per barrel after falling on Wednesday,” Zvarich said.

Recent dynamics of the oil prices may cause a further contraction of the MOEX Russia Index in the morning, but it would only be a slight correction after previous growth, and does not kill the main scenario of the index rising to 3,000. The lower threshold of the ongoing growth trend of the MOEX Russia Index lies at 2,900, and a full-scale contraction of the market would only be possible after the index has fallen below the level, he said.

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