THE Irish stock market is likely to fall during the summer months before recovering later in the year and the ISEQ Index should end the year 7 per cent above its current level at 3500, says NCB Stockbrokers in its latest strategy document on the market. "The bull run is not over and the upward momentum is likely to be reestablished in the final quarter.
"The Irish market is likely to drift lower over the summer months but we expect the ISEQ to end the year about 7 per cent higher at the 3500 level," says NCB analyst, Mr John Conroy.
Mr Conroy says the key factor underlying NCB's long term bullish stance is that the interest rate rises in the US are likely to be modest - a quarter or a half of a percentage point. In addition, the movement to EMU should underpin interest rate convergence.
On the specifics of the Irish market, the NCB analyst says: "The domestic economic story remains compelling and valuations are still attractive in relative terms but the market will not he immune to a bout of weakness in the international market." He forecasts that the index may fall to a low of 3150 (the ISEQ is currently at 3345) before recovering to 3500.
Among the top 15 stocks in the market, NCB recommends that investors take an overweight position in Elan, Smurfit, Greencore, Powerscreen and Fyffes; a market weighting in CRH, Irish Permanent, Waterford Wedgwood and Woodchester and be underweight in Bank of Ireland, AIB, Kerry, Irish Life, Independent and Northern Ireland Electricity.
Among smaller capitalisation stocks, NCR has added Unidare and Golden Vale to its portfolio of favourites, which also includes Arnotts, Clondalkin, Heiton, IWP, Irish Continental, Jurys and Kingspan.
