Financial analysts stated that the Nigerian equities market is expected to experience uptrend this week as investors continue to react positively to critical reforms promised during the inaugural speech of President Bola Tinubu on May 29, 2023.
After closing the month of May positive for the fourth consecutive year to defy the ‘sell in May and come back in October’ mantra among stockbrokers, upbeat momentum ruled trading activities in the local bourse last week to kickstart the new trading month on the back of market expectations for further policy guideline and direction from the new administration after the successful transition of power to President Bola Tinubu.
Also, the positive market performance can be attributed to higher dividend payouts and relatively improved liquidity as fixed income yields were not stable in the face of heightening inflation which supported buying interests in the market and flow of funds into the equity space.
Analysts Optimism
On market performance this week, analysts at Cordros Securities Limited said: “we envisage extended bargain hunting in the coming week as investors continue to digest the policy direction of the new administration. However, we do not rule out intermittent profit-taking activities.
“In the medium term, we expect investors’ sentiments to be influenced by developments in the macroeconomic landscape and the movement of yields in the fixed-income space. Lastly, we reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings.”
In the next session, analysts at Cowry Assets Management Limited expected a mixed trend of activity in the midst of profit taking and cautious trading as portfolio reshuffling persists even as the market expects more policy guideline of the new government.
“However, we continue to advise investors to target fundamentally sound companies and defensive stocks to protect their portfolios post-dividend adjustments. Any pullback at this point may add more strength to upside potentials,” Cowry said.
Last Week’s Trading Activities
The bullish momentum last week in the local bourse accelerated as investors hunted for bargains following positive reactions to President Tinubu’s inaugural speech.
Notably, intense buying activities on the first trading session of the holiday shortened week resulted in the market recording its biggest single-day gain of 5.2 per cent since November 12, 2020.
As such, the All-Share Index ended the week in the green, closing higher by 5.37 per cent week-on-week (W-o-W) to close at 55,820.50 points. Similarly, market capitalisation gained N1.550 trillion W-o-W to close at N30.395 trillion.
Remarkably, investors’ interest in MTN Nigeria Communications (MTNN), Dangote Cement and BUA Foods underpinned the positive performance.
Also, the performance index across sectors was green and can be attributed to price appreciation after adjustment for dividend and position taking by majority shareholders. To this, the NGX Oil & Gas index led the gains by 10.48 per cent W-o-W. NGX Consumer Goods index followed with a weekly gain of 8.52 per cent, while NGX Industrial Goods rose by 5.83 per cent.
The NGX Banking index recorded a weekly gain of 4.89 per cent, while NGX Insurance index gained 1.21 per cent for the week.
The market breadth for the week was positive as 66 equities appreciated in price, 23 equities depreciated in price, while 67 equities remained unchanged. Conoil led the gainers table by 45.78 per cent to close at N69.90, per share. Eterna followed with a gain of 32.14 per cent to close at N9.25, while Jaiz Bank went up by 30.00 per cent to close to N1.30, per share.
On the other side, Tantalizers led the decliners table by 16.00 per cent to close at 21 kobo, per share. Consolidated Hallmark Insurance followed with a loss of 11.48 per cent to close at 54 kobo, while Prestige Assurance declined by 8.89 per cent to close at 41 kobo, per share.
Overall, a total turnover of 2.586 billion shares worth N46.643 billion in 35,122 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 1.963 billion shares valued at N33.899 billion that exchanged hands previous week in 30,827 deals.
The Financial Services Industry (measured by volume) led the activity chart with 1.890 billion shares valued at N23.041 billion traded in 17,806 deals; contributing 73.10 per cent and 49.40per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 170.218 million shares worth N638.188 million in 1,830 deals, while the Consumer Goods Industry traded a turnover of 132.432 million shares worth N3.837 billion in 4,938 deals.
Trading in the top three equities; Access Holdings, United Bank for Africa (UBA) and FBN Holding (FBN) accounted for 915.908 million shares worth N10.916 billion in 6,575 deals, contributing 35.42 per cent and 23.40 per cent to the total equity turnover volume and value respectively.
