Capital market analysts are expecting sustained positive sentiments to continue this week to start off trading for the new year given the renewed attractiveness of the sectors.
Analysts posit three scenarios for equities market performance this year; base, bear and bull cases, saying “in the base case, which is the scenario that we believe is most likely to play out, we expect a combination of positive corporate earnings, a muted uptick in fixed-income yields and investors’ positive reactions to the election’s outcome, will support market performance and lead to a 3.5 per cent return for 2023 full year.”
Looking ahead, analysts at Cowry Assets Management Limited expected the current trend is expected to continue on profit-taking and bargain hunting activities ahead of the holidays 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.”
Analysts at Cordros Securities Limited said: “in the first trading week of the new year, we expect the bulls to retain their dominance in the local bourse as buying activities due to positioning for 2022 full year earnings announcements and accompanying dividend declarations will likely outweigh profit-taking activities.
“Nevertheless, we reiterate the need for investors to take positions in only fundamentally justified stocks as the weak macro environment remains a significant headwind for corporate earnings.”
2022 Last Trading Week Activities
The market opened for three trading days last week as the federal government declared December 26 and 27, 2022 a Public Holiday to mark the Christmas celebration.
The local bourse sustained its weekly bull dominance ahead of the festive holidays just as we saw the persistence of bargain hunting activities among investors and traders who are looking to take position in value stocks at their current prices. Regardless of the profit-taking activities by speculators, the bourse’s bull trend stays strong and is expected to be sustained the recovery mode heading into another trading year.
At the close of last week, the benchmark index trended northward week-on-week (W-o-W) in the face of strong momentum and buying sentiment from players ahead of the year-end window dressing by traders and investors who want to close the year higher than was earned at the end of the year coupled with the changing yield environment in the fixed income space as was seen from the recent Nigerian Treasury Bills PMA where the rates and yield suffered decline across tenor gauges.
The All-Share Index closed higher by 3.11 per cent W-o-W to close at 51,251.06 points, the highest index points in four months. Similarly, the market capitalisation gained N841 billion to close at N27.915 trillion.
Notably, bargain-hunting in bellwether stocks, Airtel Africa, Nestle Nigeria, Geregu Power and Nigerian Breweries stoked the positive performance.
Across the sectorial front, the performance was largely bullish in the week with all sectors and was spearheaded by the Banking Index which gained 1.97 per cent week on week. Similarly, the Consumer Goods sector performed positively by 0.98 per cent and NGX Oil & Gas, NGX Insurance and NGX Industrial Goods Indices closed the week by 0.91 per cent, 0.32 per cent and 0.04 per cent in that order from the prior week.
The market breadth for the week was positive as 44 equities appreciated in price, 16 equities depreciated in price, while 97 equities remained unchanged. Computer Warehouse Group (CWG) led the gainers table by 31.17 per cent to close at N1.01, per share. Geregu Power followed with a gain of 29.00 per cent to close at N149.00, while Wema Bank went up by 21.12 per cent to close to N3.90, per share.
On the other side, Livestock Feeds led the decliners table by 8.40 per cent to close at N1.09, per share. FBN Holdings (FBNH) followed with a loss of 7.63 per cent to close at N10.90, while Fidelity Bank declined by 6.45 per cent to close at N4.35, per share.
Overall, a total turnover of 1.880 billion shares worth N18.988 billion in 12,036 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 860.933 million shares valued at N16.134 billion that exchanged hands last week in 14,502 deals.
The Financial Services Industry (measured by volume) led the activity chart with 1.719 billion shares valued at N8.755 billion traded in 6,172 deals; contributing 91.42 per cent and 46.11 per cent to the total equity turnover volume and value respectively.
The Conglomerates Industry followed with 27.506 million shares worth N79.195 million in 355 deals, while the Oil and Gas Industry pulled a turnover of 24.367 million shares worth N2.203 billion in 758 deals.
Trading in the top three equities; Sovereign Trust Insurance, Veritas Kapital Assurance and FBN Holdings (measured by volume) accounted for 1.149 billion shares worth N3.469 billion in 295 deals, contributing 61.11 per cent and 18.27 per cent to the total equity turnover volume and value respectively.
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