Investment analysts in the Nigerian capital market expect that activity in the equities market will be dotted by a mixture of profit taking and bargain this week.
Analysts at Cordros Capital Limited said: “we expect market performance to remain mixed in the week ahead as investors rotate their portfolio towards dividend-paying stocks, which intermittent profit-taking activities would match.
“Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings.”
The founder of Tradelines DotBiz Investment Limited, Mr Tunde Jeariogbe stated that, “mixed performance, after few gains, profit taking is expected within the week, nevertheless, we are expecting March account from equities like Flour Mills of Nigeria, Learn Africa, Northern Nigeria Flour Mills (NNFM), and the likes.”
He explained that, market is also currently positioning for the half year earnings from companies with December financial year, these will enhance market performance against bearish moves.
Afrinvest Limited added that, “in the coming week, we expect to see some bargain hunting in early trades as investors seek to take position in bellwethers that have fallen to attractive entry prices. However, we believe the negative performance will be sustained in the absence of a positive catalyst.”
Cowry Assets Management is of the view that, “in the new week, we expect the equities market to trade positive as investors position in stocks of companies likely to pay interim dividends.”
According to the chief operating officer of InvestData Consulting Limited, Ambrose Omordion, we see the rebound sustained as player’s digest the inflation data, high oil price and dividend possibilities in the midst of buyers dominating sellers in recent trading sessions, revealing the presence of bargain hunters taking advantage of the pullbacks to position for quarter-end window dressing, seeming positive economic data ahead of March, April and May full-year earnings reports.
“We note that half-year interim dividend stocks are becoming more attractive at this point for income investors and traders, even as the market anticipates positive news, while oil price continues to oscillate above $72 per barrel to support global economic and stock market recovery across climates.
“We also expect the ongoing COVID-19 vaccination to support global and domestic economic recovery that will enhance the market and give direction. The banking sector and others remain attractive on the back of the prevailing low prices, despite the Q1 mixed numbers,” he pointed out.
He emphasized that the way to go is to target dividend-paying stocks and fundamentally sound companies with growth prospects in 2021, looking the way of mispriced equities ahead of interim dividend announcement, saying, this is especially given that despite the seeming improvements, fixed income yield continues to offer negative real rate of return due to the galloping inflation.
He added that, however, the strong and faster recovery may continue, depending on market forces, going forward, as propelled by expected Q2 earnings reports, until the next MPC meeting in July.
Although the market last week closed positive on three of the week’s four trading sessions, the gains proved insufficient in pushing the market to a green close for the week.
The week was four-day trading activities as the Federal Government of Nigeria declared Monday June 14, June 2021 as Public Holiday to mark the Democracy Day celebrations.
Analysts observed that investors took full advantage of the gains recorded over the last two weeks in booking profit on bellwether stocks. Precisely, the NGX All-share Index shed 507.37 points or 1.30 per cent week-on-week (W-o-W) to close at 38,648.91 points. Similarly, market capitalisation declined N266 billion to the week at N20.143 trillion. Specifically, foreign investors’ sell-offs of Airtel Africa and profit-taking in Okomu Oil and Stanbic IBTC Holdings drove the weekly loss.
However, sectoral performance did not mirror the overall market performance as it closed in the green zone; the NSE Banking, NSE Insurance, NSE Consumer Goods and the NSE Oil & Gas indices rose by 1.09 per cent, 0.76 per cent, 0.25 per cent and 1.05 per cent to close at 362.51 points, 200.93 points, 568.35 points and 314.21 points respectively. On the flip side, the NSE Industrial index fell by 0.05 per cent to close at 1,951.41 points.
Market breadth for the week was positive as 38 equities appreciated in price, 25 equities depreciated in price, while 93 equities remained unchanged. Berger Paints Nigeria led the gainers table by 14.93 per cent to close at N7.70, per share. Lasaco Assurance followed with a gain of 10.29 per cent to close at N1.50, while Champion Breweries went up by 10 per cent to close to N1.98, per share.
On the other side, UAC of Nigeria (UACN) led the decliners table by 11.01 per cent to close at N9.70, per share. Airtel Africa followed with a loss of 10 per cent to close at N753.30 and Abbey Mortgage Bank declined by 9.52 per cent to close at 95 kobo, per share.
Overall, a total turnover of 981.147 million shares worth N10.384 billion in 15,001 deals were traded last week by investors on the floor of the Exchange, in contrast to a total of 1.058 billion shares valued at N12.831 billion that exchanged hands previous week in 17,854 deals.
The Financial Services Industry (measured by volume) led the activity chart with 695.803 million shares valued at N5.178 billion traded in 8,616 deals; thus contributing 70.92 per cent and 49.86 per cent to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 75.879 million shares worth N1.227 billion in 2,263 deals, while Conglomerates Industry traded a turnover of 67,430 million shares worth N367.306 million in 612 deals.
Trading in the top three equities namely Zenith Bank, Sterling Bank and Wema Bank (measured by volume) accounted for 265.649 million shares worth N2.450 billion in 2,742 deals, contributing 27.08 per cent and 23.60 per cent to the total equity turnover volume and value respectively.
On Exchange Traded Products (ETPs) platform, a total of 101,419 units valued at N1.610 million were traded last week in 14 deals compared with a total of 1,026 units valued at N160,140.75 transacted previous week in eight deals, while on the Bonds market, a total of 26,452 units valued at N27.236 million were traded last week in 17 deals compared with a total of 5,335 units valued at N5.350 million transacted previous week in 10 deals.