Mixed Trading, Sentiment May Linger In Stock Market This Week

The recent seesaw movement on the Nigerian stock market as revealed by the up and down trends in sentiments may continued on the market this week.

Analysts noted that the ongoing mixed sentiments is due to selloffs, pullbacks and bargain hunters taking advantage of the prevailing relatively low prices of stocks and blue-chip companies relative to value. This is especially true of those that suffered losses in the midst of the strong numbers posted by these companies, thereby revealing their undervalued state, as seen in the high dividend yields indicating the possibility of a higher payout as a hedge against the soaring inflation.

Analysts Optimism

The chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion said: “we expect the mixed trends and sentiments to continue on bargain hunting as players react to the impressive half-year results in expectation of more company’s scorecards, especially from the first-tier banks in the midst of sovereign risks, as all eyes are on interim dividends.

“We note also the flow of funds into the fixed income segment on the rate hike by the CBN, as sector rotation persists. Analysts are also focused on the lookout for Q2 GDP and flow of funds amid oil prices oscillation.”

He added that, “the market also continues to interpret the rising inflation in relation to the crude oil price and other factors, in the midst of profit-taking and portfolio rebalancing. This will result in market players targeting fundamentally sound and dividend-paying stocks in the hope of dividend announcements.”

Going into the new week, analysts at Cowry Assets Management Limited expected the market to trade with mixed sentiment as investors position to rebalance their portfolios while they continue exhibiting minimal apathy towards risk assets like equities, saying “however, we continue to advise investors to trade on companies’ stocks with sound fundamentals and a positive outlook.”

Cordros Securities Limited said: “in the week ahead, we believe investors will focus on the outcome of the bond auction scheduled to hold ‪on Monday (August 15, 2022) to gain further clarity on the movement of yields in the fixed income (FI) market.

“As a result, we envisage cautious buying actions from dividend-yield-seeking investors amid intermittent profit-taking activities. Notwithstanding, we reiterate the need for positioning in only fundamentally sound stocks as the unimpressive macro environment remains a significant headwind for corporate earnings.”

Last Week’s Trading Activities

The bears dictated proceedings in the domestic bourse, as profit-taking activities dominated market performance, with the benchmark index recording declines on four of the five trading sessions of last week.

Precisely, the All-Share Index dipped by 2.09 per cent week-on-week (W-o-W) to close at 49,664.07 points. Similarly, market capitalisation dipped N571 billion to close at N26.787 trillion.

Notably, selloffs of MTN Nigeria Communications (MTNN), BUA Cement, Dangote Cement and Stanbic IBTC Holdings stocks led to the weekly loss.

Analysing by sectors, the Industrial Goods index declined by 5.2 per cent W-o-W.  Banking index recorded a weekly loss of 0.9 per cent, while Oil & Gas index shed 0.4 per cent W-o-W. On the other side, the Insurance posted a weekly gain of 6.0 per cent and Consumer Goods index appreciated by 3.0 per cent W-o-W.

The market breadth for the week was positive as 33 equities appreciated in price, 26 equities depreciated in price, while 97 equities remained unchanged. Ikeja Hotel led the gainers table by 30.93 per cent to close at N1.27, per share. Multiverse Mining and Exploration followed with a gain of 29.79 per cent to close at N2.44, while NEM Insurance went up by 29.71 per cent to close to N4.41, per share.

On the other side, Cutix led the decliners table by 14.58 per cent to close at N2.05, per share. Caverton Offshore Support Group followed with a loss of 10.26 per cent to close at N1.05, while BUA Cement declined by 9.95 per cent to close at N52.95, per share.

Overall, a total turnover of 1.511 billion shares worth N13.547 billion in 20,074 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 705.636 million shares valued at N12.850 billion that exchanged hands previous week in 22,124 deals.