Positive Sentiments To Return As Equities Market Reposition For Q2

Capital market analysts expect sustained positive sentiments to continue this week as the market repositions for the new trading quarter.

The prevailing dividend yields and low market price to earnings ratio provide better opportunities for discerning investors to hedge against inflation even when fixed income market yields look mixed. There is, however, the uncertainty of a rate crash by the incoming government to drive the economy, just as a policy shift may be a plus for the equities on a likely financial market and economic reset.

Despite the ongoing extreme volatility and positive sentiment, the market remains below the T-line, even as attention is shifting to corporate earnings, due to the increasing number of companies announcing their board meeting dates to approve audited results and recommend dividend.

Analysts Optimism

In the current week, analysts at Cowry Assets Management Limited expect the current trend of positive sentiments and uptrend to continue as the market reposition for the new trading quarter and the gradual transit into the dividend earning season while players analyse recent earnings inflow.

Cordros Securities Limited said: “with the moderation in the prices of bellwether stocks this week, we expect investors to take advantage of this and make a re-entry. However, this will be dependent on positive financial results releases. In the near term, we expect investors’ sentiments to be influenced by developments in the macroeconomic landscape and the movement of yields in the fixed income space.

“Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings.”

Last Week’s Trading Activities

Bargain hunting activities took grip of the local bourse for another week amid reactions to earlier released numbers in the midst of more corporate earnings hitting the market ahead of the quarter-end window dressing by fund managers in quest to close the period higher and at the same time, reposition for the new quarter.

The All-Share Index closed lower by 1.20 per cent week-on-week (W-o-W) to close at 54,232.34 points. Similarly, the market capitalisation shed N18 billion to close at N29.544 trillion.

Across the sectors last week, performance was largely on a bull trend except for the NGX Oil & Gas index which lost 2.02 per cent week on week from sell pressure.

On the other hand, the NGX Banking index led the gainers with 3.67 per cent gains week on week, while NGX Insurance recorded a weekly gain of 1.61 per cent. NGX Consumer Goods index up by 0.94 per cent W-o-W, while NGX Industrial Goods index rose by 0.36 per cent.

The market breadth for the week was positive as 37 equities appreciated in price, 30 equities depreciated in price, while 90 equities remained unchanged. Oando led the gainers table by 34.12 per cent to close at N5.70, per share. Ikeja Hotel followed with a gain of 18.45 per cent to close at N1.22, while Champion Breweries went up by 13.27 per cent to close to N5.55, per share.

On the other side, Prestige Assurance led the decliners table by 11.11 per cent to close at 40 kobo, per share. NCR Nigeria followed with a loss of 9.79 per cent to close at N2.12, while CWG declined by 9.38 per cent to close at 87 kobo, per share.

Overall, a total turnover of 2.071 billion shares worth N17.562 billion in 17,917 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 1.689 billion shares valued at N11.066 billion that exchanged hands previous week in 14,019 deals.

The Financial Services Industry led the activity chart with 948.792 million shares valued at N7.621 billion traded in 7,903 deals; contributing 45.80 per cent and 43.40 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 930.664 million shares worth N1.486 billion in 1,591 deals, while the Oil and Gas Industry traded a turnover of 60.510 million shares worth N1.472 billion in 1,369 deals.

Trading in the top three equities; Transnational Corporation (Transcorp), Living Trust Mortgage Bank and Fidelity Bank, (measured by volume) accounted for 1.429 billion shares worth N3.461 billion in 1,620 deals, contributing 69.00 per cent and 19.71 per cent to the total equity turnover volume and value respectively.