Banking stocks like Absa could benefit if the rand holds strong this week, dealers and analysts said on Friday, noting the broad market could take direction from economic data after a choppy month for equities.
"If the rand continues this firmer trend, then you're going to see commodity stocks under pressure and demand for banking shares," said one senior equities dealer.
David Kinsey, banking analyst at brokerage Barnard Jacobs Mellet, said local banks should continue to do well as demand for financial services grew in a low interest rate environment.
A mean average of eight forecasts from analysts surveyed by Reuters this week put Absa's forecast headline earnings, excluding the effect of new accounting standard AC133, up almost 20 percent at 626.9 cents a share for the 12 months to the end of March, compared to 528.1 cents a year earlier.
Aside from possible gains in bank stocks, the rest of the market is expected to trade cautiously and watch for indications of possible interest and inflation rate direction.
"The market has come back from its oversold position, but I think it will struggle to do much from here," said investment strategist Craig Pheiffer at Sasfin Frankel Pollak Securities.
The stock market is close to the levels where it started the month but has veered from a six percent loss one week to a four percent gain the next, tugged by currency movements and skittish world markets.
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