Positive Sentiment To Linger On Equities Market

Analysts have projected positive sentiment to linger on the Nigerian stock market this week, as investors cherry-pick on fundamentally sound stocks.

The Santa Claus rally continued on the Nigerian Exchange, ahead of the Christmas holidays, and end of the year window dressing in the midst of seeming buying power and strong momentum as revealed in the short, medium and long term trend of the market. 

Therefore, signaling the continuation of this recovery into the new year as all eyes are on the expected companies’ full earnings and corporate actions to support price in the face of 2023 general election uncertainty and post-election rally, all things being equal.

Analysts Optimism

Looking ahead, analysts at Cowry Assets Management Limited, said: “the current trend is expected to continue on profit-taking and bargain hunting activities ahead of the holidays as the market pullbacks add more strength to the upside potential of the index. However, we continue to advise investors to trade on companies’ stocks with sound fundamentals.”

Cordros Securities Limited stated that, “as the year draws to an end, we expect yield-seeking investors to take positions in stocks with attractive dividend yields ahead of the 2022 full year dividend declarations.

“However, we advise investors to take positions in only fundamentally sound stocks as the fragility of the macroeconomic environment remains a significant headwind for corporate earnings.”

Analysts at Afrinvest Limited noted that, ‘this trading week, we anticipate soft gains in the absence of negative catalysts.’

Last Week’s Trading Activities

The local bourse sustained its weekly bull dominance ahead of the festive holidays just as the market saw the persistence of bargain hunting activities among investors and traders who are looking to take position in value stocks at their current prices.

Regardless of the profit-taking activities by speculators, the bourse’s bull trend stays strong and it is expected to be sustained in the recovery mode heading into another trading year.

Pertinently, the All-Share Index advanced by 0.79 per cent week-on-week (W-o-W) to close at 49,706.09 points. Also, market capitalisation rose by N212 billion to close the week at N27.074 trillion.

Notably, bargain hunting in Guaranty Trust Holding Company (GTCO), Stanbic IBTC Holdings, FBN Holdings (FBNH), BUA Foods and Geregu Power spurred the positive outturn. Based on the preceding, the month-to-date (MTD) and year-to-date (YTD) gains as at December 23, 2022 rose to 4.3 per cent and 16.4 per cent, respectively.

Across the sectorial front, the performance was largely bullish in the week. The Banking Index gained 1.97 per cent week on week. Similarly, the Consumer Goods sector performed positively by 0.98 per cent, while NGX Oil & Gas index rose by 0.91 per cent W-o-W. 

NGX Insurance index recorded a weekly gain of 0.32 per cent, while NGX Industrial Goods index up by 0.04 per cent for the week.

The market breadth for the week was positive as 41 equities appreciated in price, 17 equities depreciated in price, while 99 equities remained unchanged. Thomas Wyatt Nigeria led the gainers table by 42.11 per cent to close at 81 kobo, per share. Royal Exchange followed with a gain of 16.67 per cent to close at 98 kobo, while Champion Breweries went up by 14.63 per cent to close to N4.70, per share.

On the other side, UPDC led the decliners table by 8.08 per cent to close at 91 kobo, per share. PZ Cussons Assurance followed with a loss of 6.90 per cent to close at N11.40, while Mutual Benefits Assurance declined by 6.90 per cent to close at 27 kobo, per share.

Overall, a total turnover of 860.933 million shares worth N16.134 billion in 14,502 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 814.089 million shares valued at N12.204 billion that exchanged hands last week in 15,488 deals.

The Financial Services Industry (measured by volume) led the activity chart with 360.234 million shares valued at N3.772 billion traded in 6,905 deals; contributing 41.84 per cent and 23.38 per cent to the total equity turnover volume and value respectively. The Construction/Real Estate Industry followed with 302.200 million shares worth N927.033 million in 261 deals, while the Consumer Goods Industry traded a turnover of 39.078 million shares worth N1.685 billion in 2,593 deals.

Trading in the top three equities namely UPDC Real Estate Investment Trust, FBN Holdings (FBNH) and Guaranty Trust Holding Company (GTCO) accounted for 440.239 million shares worth N3.015 billion in 2,038 deals, contributing 51.13 per cent and 18.69 per cent to the total equity turnover volume and value respectively.