On the back of improved investors’ sentiment last week, analysts said, the gains will be sustained on the Nigerian stock market this week as more corporates released their first half (H1) year results.
Despite facing sell pressure and relatively low average volume and value, market players engaged in portfolio rebalancing while keeping an eye on corporate quarterly scorecards. This performance aligns with analysts’ assessment, and they see potential for further upside.
Analysts analysis indicated that investors have been focusing on value-oriented sector rotation, favouring blue-chip and low-cap stocks. Last week, some companies posted surprising results, while others fell short of market expectations, leading to notable price movements. Additionally, with the recent rate hike making fixed income instruments attractive, cautious investors are considering potential inflation hedging strategies within the equity space.
Analysts Optimism
Going into the new week, analysts at Cowry Assets Management Limited expected “to see positive outlook from the local bourse driven by portfolio rebalancing and opportunities to hedge against inflation. While certain sectors may face challenges, there are potential gains to be made in value-oriented sectors in the face of corporate actions and positive earnings announcements. Meanwhile, we continue to advise investors on taking positions in stocks with sound fundamentals.”
Analysts at Cordros Securities Limited said: “we believe earnings from the Tier-one banks in the coming week(s) will support positive sentiments on the bourse, especially given the anticipation of interim dividends.
“In the medium term, we expect investors’ sentiments to be influenced by developments in the macroeconomic landscape and the movement of yields in the fixed-income market. Overall, we reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings.”
Last Week’s Trading Activities
The Nigerian equities market edged higher last week as investors’ interest in MTN Nigeria Communications (MTNN) drove the All-Share Index higher by 0.22 per cent week-on-week (W-o-W) to 65,198.08 points. Similarly, market capitalisation increased N77 billion to close the week at N35.480 trillion.
Sectoral performance was mixed, with the NGX Insurance index leading the gainers with a remarkable 5.88 per cent weekly increase. The NGX Consumer Goods index rose by 2.27 per cent, while NGX Industrial Goods index also showed strength, gaining 0.23 per cent, driven by strong sentiment in mid and high cap stocks. However, the NGX Banking index and NGX Oil & Gas sectors index faced challenges, declining by 2.13 per cent and 0.68 per cent, respectively, as investors cautiously assessed the impact of the rate hike and rising fixed income yields.
The market breadth for the week was negative as 42 equities appreciated in price, 52 equities depreciated in price, while 61 equities remained unchanged. SUNU Assurances Nigeria led the gainers table by 55.00 per cent to close at 93 kobo, per share. Chellarams followed with a gain of 45.49 per cent to close at N3.39, while Abbey Mortgage Bank went up by 32.73 per cent to close to N1.46, per share.
On the other side, John Holt led the decliners table by 33.18 per cent to close at N1.47, per share. Omatek Ventures followed with a loss of 30.61 per cent to close at 34 kobo, while Sovereign Trust Insurance declined by 28.57 per cent to close at 50 kobo, per share.
Overall, a total turnover of 2.575 billion shares worth N29.615 billion in 37,713 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 2.854 billion shares valued at N37.645 billion that exchanged hands prior week in 41,547 deals.
The Financial Services Industry (measured by volume) led the activity chart with 1.921 billion shares valued at N16.514 billion traded in 17,689 deals; contributing 74.60 per cent and 55.76 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 160.206 million shares worth N625.021 million in 1,811 deals, while the Oil and Gas Industry traded a turnover of 152.046 million shares worth N1.332 billion in 2,403 deals.
Trading in the top three equities; AIICO Insurance, FCMB Group and Transnational Corporation (Transcorp) accounted for 636.217 million shares worth N1.737 billion in 2,751 deals, contributing 24.71 per cent and 5.86 per cent to the total equity
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