Lagos — Meristem Securities Limited has forecast a conservative 10.05 percent raise in the Nigerian Stock Exchange this year.

Meristem also projected high lending by banks this year and more influx of foreign direct investments into the country.

Gary Watson, Director, Investment Research, Meristem, presenting the investment bank's "Outlook 2013: Nigerian Economy and Financial Markets," in Lagos, said 2013 expectation for the equities market is expected to be driven by the financial services sector (majorly the banks) since a decline in yields on fixed income instruments should favour equities.

It also forecasts 11.05 percent return in 2013 implying an index level of 29,977.10pts.

The report saw a sustained FDI to raise above 30 percent and inflation should hover between 9.5 percent and 10.5 percent.

It said that the Monetary Policy Rate is likely to moderate in 2013 at not more than 12 percent and the naira is also expected to remain stable between N155.45 and N160.95 to one US dollar.

The report also saw improved Nigeria's economic growth this year as electricity improves and proactive agricultural policies increase capacity in the agric sector.

Mr. Watson said lots of foreigners are excited about coming to invest in Nigeria but the concern is infrastructure as the cost of doing business in Nigeria keeps rising.

He indicated that Nigeria has a huge consumer market hence the rise of super stores.

Group Managing Director/Chief Executive Officer, Meristem, Mr. Oluwole Abegunde, argued that with the reforms in the sector, banking stocks would continue to drive growth on the Nigerian Stock Exchange.