Capital market analysts said, following the latest trend in the Nigerian equities space, the market is likely to see mixed trading this week.
Though, there is the expectation that the bearish trend will prevail, analysts did not rule out the possibility of positive closures.
According to analysts at Afrinvest Limited, ‘this week, we anticipate a mix of profit taking and bargain hunting activities as the first half (H1) earnings season winds down.’
Cordros Securities Limited said: “this week, we expect investors to be focused on the bond auction scheduled to hold on Wednesday as they keep an eye on the movement of yields in the fixed income (FI) market. As a result, we envisage cautious trading amid intermittent profit-taking activities. Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings.”
Analysts at Cowry Assets Management expected the equities market to trade positively as investors position in stocks of companies that are likely to give interim dividends and as yields in the fixed income market continue to sink lower.
The chief operating officer of InvestData Consulting Limited, Mr Ambrose Omordion said: “we expect the mixed trend to continue on profit booking and repositioning in value and growth stocks on the strength of half-year earnings reports, while investors continue their portfolio reshuffling and studying of the corporate earnings ahead of the July inflation, and Q2 GDP data release, as well as results from interim dividend-paying banks.”
Omordion added that, “also, investors are still observing the interplay of market forces following recent developments in the FX market with the decision to stop the sale of dollar to BDC operators. The day’s mixed volume suggests that smart money is taking advantage of the oscillating trend and relatively low prices to reposition. It is noteworthy that oil price continues to oscillate in the international market; corporate actions, as well as the interim dividend possibilities are around the corner.”
He noted that, some stocks are trading within their buy ranges to become more attractive at this point for income investors and traders, even as the market anticipates positive news, while oil price continues to oscillate above $68 per barrel to support the global economy and stock market recovery across climates, saying, “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 mixed half-year earnings. Again, the way to go is to target dividend-paying stocks and fundamentally sound companies with growth prospects in 2021 and beyond, looking the way of mispriced equities ahead of interim dividend announcement and last quarter economic activities. This is especially given that despite the seeming improvements, fixed income yield continues to offer a negative real rate of return due to the galloping inflation.
“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 next month.”
Last week, the stock market advanced week-on-week (W-o-W) by 1.83 per cent as bullish proceedings dominated the market amid bargain hunting in ICT and Banking stocks such as MTN Nigeria Communications (MTNN), Airtel Africa, Guaranty Trust Bank Holding Company (GTCO) and Zenith Bank.
Consequently, the NGX All-Share Index advanced by 711.59 points or 1.83 per cent W-o-W to close at 39,522.34 points. Similarly, market capitalisation increased by N371 billion to close at N20.592 trillion.
Breakdown across sub-sectors tracked showed that performance was positive; the NSE Banking, NSE Consumer Goods and the NSE Oil/Gas indices rose by 0.49 per cent, 0.30 per cent and 0.43 per cent respectively to close at 381.01 points, 594.60 points and 374.24 points respectively. On the flip side, the NSE Insurance and the NSE Industrial indices fell by 2.49 per cent and 1.35 per cent respectively.
Market breadth for the week closed the same as 29 equities appreciated in price, 29 equities depreciated in price, while 98 equities remained unchanged. Honeywell Flour Nigeria led the gainers table by 28.13 per cent to close at N2.05, per share. Northern Nigeria Flour Mill followed with a gain of 22.76 per cent to close at N7.55, while Airtel Africa went up by 15.38 per cent to close to N750.00, per share.
On the other side, Juli Plc led the decliners table by 18.02 per cent to close at 91 kobo, per share. Regency Assurance followed with a loss of 12.50 per cent to close at 42 kobo and Cutix Plc declined by 11.50 per cent to close at N5.00, per share.
Overall, a total turnover of 1.610 billion shares worth N12.586 billion in 18,622 deals were traded last week by investors on the floor of the Exchange, in contrast to a total of 989.593 million shares valued at N8.183 billion that exchanged hands previous week in 19,617 deals.
The Financial Services Industry, measured by volume led the activity chart with 584.793 million shares valued at N3.728 billion traded in 8,658 deals; contributing 36.32 per cent and 29.62 per cent to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 525.860 million shares worth N3.655 billion in 3,553 deals, while Natural Resources Industry pulled a turnover of 250.928 million shares worth N1.376 billion in 72 deals.
Trading in the top three equities namely Honeywell Flour Mill, B.O.C. Gases and Flour Mills Nigeria (measured by volume) accounted for 724.067 million shares worth N 3.909 billion in 1,061 deals, contributing 44.97 per cent and 31.06 per cent to the total equity turnover volume and value respectively.
Trading in the top three equities namely Jaiz Bank, Sterling Bank and Fidelity Bank (measured by volume) accounted for 369.879 million shares worth N385.516 million in 785 deals, contributing 41.27 per cent and 7.36 per cent to the total equity turnover volume and value respectively.
On Exchange Traded Products (ETPs) platform, a total of 28,938 units valued at N949,074.38 were traded last week in 13 deals compared with a total of 17,550 units valued at N34.012 million transacted previous week in 36 deals, while on the Bond market, a total of 139,062 units valued at N139.702 million were traded last week in 19 deals compared with a total of 702,021 units valued at N709.343 million transacted previous week in 17 deals.