Analysts have said the Nigerian stock market is expected to close positive as investors seek bargain hunting opportunities.
Notwithstanding, as the year begins to take shape, the January effect in the equities that has always been positive in the past years will likely drive the ongoing volatility for a longer period as investors are keeping an open eye on various macroeconomic data and the forthcoming Monetary Policy Committee (MPC) meeting in January as well as the churn out of the fourth quarter (Q4) and full-year financials.
Analysts Optimism
Analysts at Cordros Securities Limited said: “in the interim, we believe positioning for 2022 full year earnings releases and accompanying dividends declarations will continue to support buying activities on the local bourse even as institutional investors continue to search for clues on the direction of yields in the fixed income (FI) market. However, we advise investors to take positions in only fundamentally justified stocks as the weak macro environment remains a significant headwind for corporate earnings.”
Afrinvest Limited added that, “this week, we anticipate a positive performance as investors seek bargain hunting opportunities.”
Looking forward, United Capital Plc, anticipated robust market activity and bullish sentiments to continue briefly, saying, “the usual January momentum is likely to dominate in the near term, particularly as the yield environment appears to be shifting downwards.
“We believe investors are likely to continue to favour the equities market even in Q1, 2023, as we estimate total sovereign maturities in Q1, 2023 will print at N2.3 trillion while total auctions (bonds and NT-bills) will likely hover around N1.7 trillion, creating excess liquidity of N555.2 billion. However, we see room for a brief bearish technical reversal in mid-January.”
Going into the new week, analysts at Cowry Assets Management Limited anticipated mixed trend on profit taking and positive sentiment to pervade the market in the coming days as bargain hunting activities continues ahead of the January effects and volatility just as the market pullbacks add more strength to the upside potential of the index, saying, “however, we continue to advise investors to trade on companies’ stocks with sound fundamentals.”
Last Week’s Trading Activities
After the positive close of 2022 in the spirit of a Santa Claus rally, the Lagos bourse opened for trading in 2023 on Tuesday with a positive close.
However, it closed the week southward to halt the seven consecutive weeks of bullish transition occasioned by the pullback experienced mid-week due to sell-offs and profit-taking in some of the mid-large cap stocks.
It is likely that the positive rally may linger for a long-time as listed companies continue notifying the exchange of their closed periods and planned board meetings.
Accordingly, the All-Share Index dipped by 0.06 per cent week-on-week (W-o-W) to close at 51,222.34 points. Likewise, market capitalisation declined by N16 billion to close the week at N27. 899 trillion.
Precisely, selloffs of Airtel Africa and BUA Cement amid bargain-hunting in BUA Foods and Nigerian Breweries stocks drove the weekly loss.
Across the sectoral gauges, the performance was largely bullish across the most of the indices tracked except for the NGX Industrial sector which trended southward with a decline of 0.58 per cent. On the contrary, the NGX Consumer Goods index led the gainers’ chart last week with a gain of 6.44 per cent, while NGX Banking index recorded a weekly gain of 4.27 per cent. NGX Insurance index rose by 2.68 per cent, while NGX Oil and Gas index up by 0.06 per cent for the week.
The market breadth for the week was positive as 38 equities appreciated in price, 17 equities depreciated in price, while 102 equities remained unchanged. John Holt led the gainers table by 20.55 per cent to close at 88 kobo, per share. Nigerian Aviation Handling Company (NAHCO) followed with a gain of 15.63 per cent to close at N7.40, while Nigerian Breweries went up by 14.63 per cent to close to N47.00, per share.
On the other side, Champion Breweries led the decliners table by 15.64 per cent to close at N4.64, per share. Consolidated Hallmark Insurance followed with a loss of 10.45 per cent to close at 60 kobo, while Chellarams declined by 9.82 per cent to close at N2.02, per share.
Overall, a total turnover of 921.856 million shares worth N27.154 billion in 15,601 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 1.880 billion shares valued at N18.988 billion that exchanged hands previous week in 12,036 deals.
The Financial Services Industry (measured by volume) led the activity chart with 616.527 million shares valued at N6.452 billion traded in 7,208 deals; contributing 66.88 per cent and 23.76 per cent to the total equity turnover volume and value respectively. The Industrial Goods Industry followed with 138.314 million shares worth N13.356 billion in 1,063 deals, while the Conglomerates Industry traded a turnover of 55.931 million shares worth N92.845 million in 502 deals.
Trading in the top three equities; FBN Holdings, BUA Cement and Guaranty Trust Holding Company (measured by volume) accounted for 450.338 million shares worth N17.203 billion in 1,862 deals, contributing 48.85 per cent and 63.35 per cent to the total equity turnover volume and value respectively.
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