Analysts Anticipate Cautious Stocks Trading Post-election Week

Despite the upbeat investor sentiment, capital market analysts are anticipating cautious trading this week as post-election developments unravel.

The Nigerian Exchange (NGX) Limited remains upbeat during the 2023 election season in Nigeria and signals a complete change of patterns in the history of Nigeria’s stock market as the positive sentiment and buying interest witnessed across all classes of stocks with a history of dividend payment had supported the uptrend.

As equity market investors digest the latest macroeconomic data on Nigeria’s economic performance in 2022 and the lingering cash crunch around the economy, the domestic bourse at the close of the week and ahead of the Saturday presidential and governorship elections, traded at a 16-year high, breaking out the recent resistance levels of 54, 290.84 points on buying pressure in the midst of the uptick noticed in the fixed income market rates and yields.

Analysts Optimism

Cordros Securities Limited said: “we believe investors will be focused on the outcome of the highly anticipated 2023 Presidential elections. Thus, we see more of a ‘choppy theme’ as cautious trading dominates the trading activities. 

“Overall, we advise investors to seek trading opportunities in only fundamentally sound stocks as the weak macro story remains a significant headwind for corporate earnings.”

Going into the new week, analysts at Cowry Assets Management Limited expected a mixed and positive sentiments to continue as market players digest Q4 GDP figure of 3.52 per cent even as the results from the presidential and national assembly elections begin to fall in. 

“Also, the recent uptick in rates seen in the fixed income market at the end of the last treasury bills auction in the midst of corporate earnings expectation, portfolio rebalancing and elections jittery are expected to drive sentiments in the market. However, we advise investors to trade companies with sound fundamentals and, as such, should take advantage of price corrections in line with domestic and global trends,” they said.

Last Week’s Trading Activities

The domestic equities market closed last week positive. Accordingly, the All-Share Index advanced by 2.13 per cent week-on-week (W-o-W) to close at 54,949.21 points. Also, market capitalisation expanded N624 billion to close the week at N29.934 trillion.

Across the sectors last week, performance was largely upbeat for most of the indices that saw support from an increased inflow of funds into the equity space and continued buying sentiments, except for the insurance index that closed the week in a quiet mode. 

Meanwhile, positive price movement was seen in the NGX Consumer Goods index with an increase of 6.30 per cent. NGX Oil & Gas index rose by 2.73 per cent, NGX Banking index up by 2.21 pe cent and NGX Industrial Goods index gained by 0.34 per cent through the week as investors posed their expectations for the early filers from these sectors to start hitting the market with their 2022 full-year scorecards even as the presidential and national assembly elections draw closer.

The market breadth for the week was positive as 39 equities appreciated in price, 22 equities depreciated in price, while 96 equities remained unchanged. MRS Oil Nigeria led the gainers table by 32.83 per cent to close at N30.55, per share. John Holt followed with a gain of 32.33 per cent to close at N1.76, while Tripple Gee and Company went up by 31.66 per cent to close to N2.62, per share.

On the other side, Capital Hotel led the decliners table by 9.42 per cent to close at N2.50k, per share. Vitafoam Nigeria followed with a loss of 7.18 per cent to close at N19.40k, while Neimeth International Pharmaceuticals declined by 6.45 per cent to close at N1.45k per share.

Overall, a total turnover of 799.848 million shares worth N29.354 billion in 14,194 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 751.990 million shares valued at N20.575 billion that exchanged hands previous week in 15,822 deals.

The Financial Services Industry (measured by volume) led the activity chart with 480.122 million shares valued at N6.129 billion traded in 6,319 deals; contributing 60.03 per cent and 20.88 per cent to the total equity turnover volume and value respectively. The Utilities Industry followed with 126.882 million shares worth N12.940 billion in 289 deals, while the ICT Industry traded a turnover of 54.012 million shares worth N5.930 billion in 1,575 deals.

Trading in the top three equities; Geregu Power, Guaranty Trust Holding Company (GTCO) and Zenith Bank (measured by volume) accounted for 307.755 million shares worth N17.489 billion in 2,325 deals, contributing 38.48 per cent and 59.58 per cent to the total equity turnover volume and value respectively.