Capital market analysts expect sustained positive sentiments on the stock market to continue this week as more companies release their 2022 financial year end results on the Nigerian Exchange (NGX) Limited.
Most of the corporate results released so far are impressive and beat analysts’ expectations. The corporate earnings have given an insight into what the companies’ final dividend will look like, especially the ones that are expected to grow their payout, judging by the earnings per share and established dividend policies.
Analysts Optimism
Looking ahead into the new week, analysts at Cowry Assets Management Limited expected the current trend of positive sentiment to sustain its grip on the market on the back of more audited earnings expectations and election uncertainty.
“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,” Cowry said.
Analysts at Cordros Securities Limited said: “in the subsequent weeks, we expect the NGX to be flooded with corporate earnings as more companies publish 2022 full year numbers, which will be accompanied by dividend declarations. We believe this should provide a catalyst for buying activities even as risk-averse investors are likely to remain cautious due to medium-term expectations of an uptick in FI yields.
“Overall, we advise investors to seek trading opportunities in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings.”
Afrinvest Limited stated that, “this week, we expect the positive performance to be sustained as investors position ahead of dividend payment season amid unattractive fixed-income yield.”
On market outlook, the chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion said: “we expect positive sentiment to continue on position and profit taking as portfolio rebalancing in the midst of impressive corporate earnings and divergence in fixed income rates and MPR, on more audited earnings expectations and election uncertainty.
“Any pullback at this point may add more strength to upside potential. As such, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.”
Last Week’s Trading Activities
The domestic stock market consolidated the gains recorded in the prior week as bargain-hunting dominated activities during all trading sessions of the week.
Thus, the All-Share Index advanced by 2.95 per cent week-on-week (W-o-W) to close at 54,213.09 points. Similarly, the market cap increased by N847 billion last week to close at N29.528 trillion.
Notably, buying interests in MTN Nigeria Communications (MTNN), Geregu Power and Seplat Energy drove the weekly gain, and partly propelled the market to Month-to-date (MTD) and year-to-date (YTD) returns of 1.8 per cent and 5.8 per cent respectively.
Sectoral performance was broadly positive. NGX Oil & Gas index gained by 9.2 per cent W-o-W. The NGX Banking index followed with a weekly gain of 2.5 per cent, while NGX Insurance and NGX Industrial Goods indices recorded a weekly gain of 0.3 per cent and 0.1 per cent. On the flip side, the Consumer Goods index declined by 0.4 per cent for the week.
The market breadth for the week was positive as 55 equities appreciated in price, 27 equities depreciated in price, while 75 equities remained unchanged. International Energy Insurance led the gainers table by 57.14 per cent to close at 99 kobo, per share. Northern Nigeria Flour Mills (NNFM) followed with a gain of 44.44 per cent to close at N9.75, while Geregu Power went up by 36.88 per cent to close to N219.00, per share.
On the other side, Chams Holding Company led the decliners table by 16.67 per cent to close at 25 kobo, per share. Guinness Nigeria, Ikeja Hotel and NCR Nigeria followed with a loss of 10.00 per cent each to close at N63.00, 99 kobo and N3.24 respectively, while Academy Press declined by 9.85 per cent to close at N1.19, per share.
Overall, a total turnover of 3.789 billion shares worth N27.500 billion in 20,333 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 756.769 million shares valued at N13.653 billion that exchanged hands last week in 18,248 deals.
The Financial Services Industry (measured by volume) led the activity chart with 3.461 billion shares valued at N7.182 billion traded in 8,978 deals; contributing 91.35 per cent and 26.12 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 78.306 million shares worth N210.522 million in 746 deals, while the Consumer Goods Industry traded a turnover of 54.009 million shares worth N1.923 billion in 3,405 deals.
Trading in the top three equities; Universal Insurance, Guaranty Trust Holding Company (GTCO) Plc and Zenith Bank (measured by volume) accounted for 3.048 billion shares worth N4.653 billion in 2,674 deals, contributing 80.45 per cent and 16.92 per cent to the total equity turnover volume and value respectively.
