Mixed Session, Positive Outing Performance Await Equities Investors

Capital market analysts anticipate a mixed session and positive outing performance this week.

The market index last week closed at 71,419.87 points after testing a new level of 71,566.58 basis points on the strength of highly priced stocks and low cap companies hitting new 52-week highs in the face of increasing macroeconomic headwinds, weak economic growth and impressive corporate earnings that had supported prices and buoyed investor confidence in the equity space.

After a volatile trading month of November, which recorded a 3.08 per cent month-on- month (M-o-M) gains, December kick started on a high note with trading activities on the Nigerian stock market staying positive for another week, signaling upbeat momentum in investor’s optimism as they continue taking a bet on Nigerian stocks amidst improved buying interest.

Analysts Optimism

Analysts at Cordros Securities Limited said “given the lack of notable positive catalysts to stimulate sentiments, we expect cautious trading to persist in the domestic bourse next week. Nonetheless, we reiterate the need for investors to seek positions in only fundamentally justified stocks as the weak macro environment remains a significant headwind for corporate earnings.”

Cowry Assets Management Limited, said:  “the upcoming weeks promise a dynamic and multifaceted landscape for investors to navigate as we anticipate profit-taking and corrections after the recent market surge, potentially fortifying future upside potential.

“This is expected as investors assess global events, fixed income yields, and CBN policies. Earnings reports will be closely watched, acting as barometers for economic health and sector-specific performance. Economic data, encompassing inflation, employment, and GDP growth, will significantly influence market sentiment and stability.”

According to Cowry, the CBN’s policy decisions on interest rates are poised to be key determinants in shaping market dynamics. Global geopolitical factors and trade relations will play a crucial role in investors’ risk assessments and decision-making. Portfolio adjustments are likely as market participants strategically position themselves amid December trends and potential financial market resets.

“Amidst all these, we maintain our advice to investors on taking positions in stocks with sound fundamentals and whose earnings yield and earnings per share support higher payout ratio,” it noted.

Last Week’s Trading Activities

Last week, the Nigerian equities market saw an uptick, driven by bargain hunting in Seplat Energy and Nestle Nigeria.

Consequently, the All-share Index advanced by 0.27 per cent week-on-week to close at 71,419.87 points. However, the overall market capitalisation decreased by N90 billion to close the week at N39.082 trillion.

This is due to the delisting of Union Bank of Nigeria (UBN) from the daily list of the Exchange which resulted in a loss of N90.4 billion as the market observed strategic moves by investors who saw opportunities in low-priced equities on the strength of better than expected numbers from these companies and market sentiments with high anticipation of the forthcoming dividend season, and the potential impact of the Santa-Claus rally.

Elsewhere, sectoral performance was mixed, following gains in the NGX Banking index with a weekly gain of 1.9 per cent, while NGX Oil and Gas index rose by 6.0 per cent . On the other hand, the NGX Insurance index declined by 2.0 per cent, NGX Industrial Goods dipped by 1.2 per cent and NGX Consumer Goods index depreciated by 0.5 per cent the week.

The market breadth for the week was negative as 32 equities appreciated in price, 49 equities depreciated in price, while 73 equities remained unchanged. Mecure Industries led the gainers table by 41.04 per cent to close at N12.99, per share. Northern Nigeria Flour Mills (NNFM) followed with a gain of 24.78 per cent to close at N36.00, while Thomas Wyatt Nigeria went up by 20.19 per cent to close to N2.50, per share.

On the other side, Omatek Venture led the decliners table by 21.21 per cent to close at 78 kobo, per share. Guinea Insurance followed with a loss of 20.59 per cent to close at 27 kobo, while DAAR Communications declined by 20.51 per cent to close at 31 kobo, per share.

Overall, a total turnover of 2.543 billion shares worth N38.644 billion in 36,138 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 2.425 billion shares valued at N22.665 billion that exchanged hands prior week in 33,230 deals.

The Financial Services Industry (measured by volume) led the activity chart with 1.721 billion shares valued at N18.281 billion traded in 17,151 deals; contributing 67.68 per cent and 47.30 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 200.584 million shares worth N1.546 billion in 2,073 deals, while the Services industry traded a turnover of 122.025 million shares worth N376.167 million in 2,051 deals.

Trading in the top three equities namely Universal Insurance, Access Holdings and Transnational Corporation (Transcorp) accounted for 660.409 million shares worth N4.795 billion in 4,194 deals, contributing 25.97 per cent and 12.41 per cent to the total equity turnover volume and value respectively.