Mixed Stock Trade Trend Amid Portfolio Realignments

Analysts have anticipated that the Nigerian stock market sentiment will remain mixed due to ongoing portfolio realignments as trading activities commence for the month of September.

The stock market has been in a bull run that led to the All-Share Index (ASI) recording a new all-time high of 67,527.19 points in the midst of a weaker broader market gains and momentum, even as Nigeria’s economic headwinds continue to weigh on businesses and the purchasing power of Nigerians. 

This bullish momentum has been primarily attributed to stronger investor sentiment, buying activities and strategic sectoral positioning. Also, the bullish trend underscored the Nigerian market’s commendable resilience in the face of prevailing global uncertainties.

Analysts Optimism

Analysts at Cordros Securities Limited said: “we anticipate mixed sentiments in the week ahead, as investors continue to cherry-pick fundamentally sound stocks based on recent corporate actions. 

“However, we acknowledge the possibility of profit-taking activities on stocks that have experienced notable appreciation in recent weeks. Notwithstanding, we opine that investors should seek trading opportunities in fundamentally sound stocks as the weak macroeconomic environment remains a significant headwind to corporate earnings.”

Looking ahead, Cowry Assets Management Limited said (“we anticipate that the market sentiment will remain mixed due to ongoing portfolio realignments. This will be influenced by a combination of bargain hunting and uncertainty regarding future money market yields, particularly in light of the upcoming earnings reports from first-tier banks and the continuation of sectoral rotation. 

“Despite this mixed sentiment, it’s worth noting that pullbacks in the market are creating opportunities for investors and these opportunities coincide with the government’s ongoing economic reforms. Meanwhile, we continue to advise investors on taking positions in stocks with sound fundamentals.”

Last Week’s Trading Activities

The local bourse extended its bullish momentum for the second consecutive week. Thus, the All-Share index closed last week 3.00 per cent higher to close at 67,527.19 points, pushing the Year-to-Date gain to 31.76 per cent. Similarly, the total market capitalization of listed equities rose by N1.08 trillion to close the week at N36.958 trillion.

The stellar performance of the market was attributed to several stocks, including Dangote Cement, Dangote Sugar Refinery, NASCON Allied Industries, Transnational Corporation (Transcorp) and the Bank stocks. Fidelity Bank’s improved dividend, rising from N0.10 to N0.25, played a role in propelling the banking sector. Additionally, Guaranty Trust Holding Company (GTCO) announced H1 results that showcased a substantial 3.6x increase in net profit and an interim dividend of N0.50, compared to N0.30 in H1, 2022. 

A sector-wise analysis showed a bullish sectoral performance and was evidenced in the NGX Consumer Goods index which emerged as the leading gainer last week with 7.58 per cent and was followed by the NGX Oil & Gas, Banking, Industrial and Insurance Services indices that have also been particularly pronounced gainers, showcasing respective week-on-week increments of 5.38 per cent, 5.11 per cent, 2.00 per cent and 0.80 per cent. 

The market breadth for the week was positive as 43 equities appreciated in price, 21 equities depreciated in price, while 92 equities remained unchanged. Omatek Ventures led the gainers table by 53.33 per cent to close at 46 kobo, per share. Nigerian Aviation Handling Company (NAHCO) followed with a gain of 41.80 per cent to close at N25.95, while Associated Bus Company went up by 39.71 per cent to close to 95 kobo, per share.

On the other side, Computer Warehouse Group (CWG) led the decliners table by 19.80 per cent to close at N4.01, per share. John Holt followed with a loss of 14.38 per cent to close at N1.31, while Prestige Assurance declined by 12.50 per cent to close at 42 kobo, per share.

Overall, a total turnover of 2.866 billion shares worth N37.050 billion in 33,968 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 1.812 billion shares valued at N29.299 billion that exchanged hands prior week in 31,163 deals.

The Financial Services Industry (measured by volume) led the activity chart with 1.424 billion shares valued at N13.398 billion traded in 18,216 deals; contributing 49.70 per cent and 36.16 per cent to the total equity turnover volume and value respectively. 

The Conglomerates Industry followed with 652.296 million shares worth N4.434 billion in 4,931 deals, while the Consumer Goods Industry traded a turnover of 264.359 million shares worth N12.036 billion in 10,821 deals.

Trading in the top three equities; Transcorp, Sterling Financial Holdings Company and Fidelity Bank accounted for 1.065 billion shares worth N6.525 billion in 6,801 deals, contributing 37.17 per cent and 17.61 per cent to the total equity turnover volume and value respectively.