H1 Earnings To Dictate Stock Market Sentiments This Week

Stock market investors are likely to switch their focus to earnings season, as more companies release their half year results during the weeks.

Analysts Optimism

According to Cordros Securities Limited, in the interim, we believe the full swing of the H1-22 earnings season will dictate market sentiments and possibly drive positive performance as investors hunt for bargains in fundamentally sound stocks with a consistent history of interim dividend payments.
“Notwithstanding, we envisage intense selling pressures on stocks of companies that grossly underperform in H1-22. Overall, we reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings,” it said.
In the new week, analysts at Cowry Assets Management Limited expected the market to trade in a mixed sentiment as the unimpressive macro story remains a headwind to market performance for the moment amid the continued earnings releases. Also, we continue to advise investors to trade on companies’ stocks with sound fundamentals and a positive outlook.

On market outlook, GTI Securities Limited noted that equity market closed the last trading day of last week positive; despite persistent sell-offs witnessed during the week. “This is likely due to positive sentiments motivated by the recent release of companies’ Q2 financial statements. We expect investors to continue to react as more companies disclose their Q2 performance in the new weeks,” it pointed out.

Last Week’s Trading Activities

Bearish sentiments persisted in the local bourse for the second consecutive week as profit-taking activities dominated market performance with the benchmark index recording losses on four of the five trading sessions of last week.
Notably, the All-Share Index ended last week 3.10 per cent lower to close at 50,370.25 points. Similarly, market capitalisation depreciated by N868 billion to close at N27.163 trillion.

Precisely, sell-offs of MTN Nigeria Communications (MTNN), Stanbic IBTC Holdings, Nestle Nigeria and Guaranty Trust Holding Company (GTCO) stocks drove the weekly loss.
Sectoral performance was negative. Insurance index lost 5.0 per cent week-on-week. Consumer Goods index record a 4.6 per cent weekly loss, while Oil & Gas index declined by 1.0 per cent W-o-W.
Also, banking index shed 0.4 per cent W-o-W, while Industrial Goods index lost 0.2 per cent for the week. The market breadth for the week was negative as 11 equities appreciated in price, 53 equities depreciated in price, while 92 equities remained unchanged. Nigerian Aviation Handling Company (NAHCO) led the gainers table by 9.09 per cent to close at N6.00, per share. Union Bank of Nigeria (UBN) followed with a gain of 7.84 per cent to close at N5.50, while UPDC Real Estate Investment Trust went up by 4.41 per cent to close to N3.55, per share.
On the other side, P Z Cussons Nigeria led the decliners table by 18.27 per cent to close at N8.50, per share. Wema Bank followed with a loss of 17.54 per cent to close at N3.29, while Ikeja Hotel declined by 17.09 per cent to close at 97 kobo, per share.
Overall, a total turnover of 1.546 billion shares worth N16.289 billion in 23,873 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 917.190 million shares valued at N14.803 billion that exchanged hands previous week in 19,513 deals.
The Financial Services Industry (measured by volume) led the activity chart with 1.192 billion shares valued at N5.978 billion traded in 11,996 deals; contributing 77.11 per cent and 36.70 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 102.969 million shares worth N236.618 million in 858 deals, while the Consumer Goods Industry traded a turnover of 102.937 million shares worth N2.616 billion in 3,167 deals.

Trading in the top three equities namely International Energy Insurance, Transcorp Hotels and Zenith Bank (measured by volume) accounted for 798.900 million shares worth N2.602 billion in 3,110 deals, contributing 51.69 per cent and 15.98 per cent to the total equity turnover volume and value respectively.