Despite a prolonged downturn, improved corporate performance spurred activities on the equities sector of the Nigerian Stock Exchange (NSE) as investors continue to analyse the full-year numbers released so far and readjust their portfolios on the strength of sectoral performance.
Consequently, the NSE All-Share Index (ASI) and market capitalidation appreciated by 2.17 per cent to close last week at 39,216.20 and N20.518 trillion respectively.
All other indices finished higher except NSE MERI Value and NSE sovereign bond indices, which declined by 1.54 per cent and 0.13 per cent while the NSE ASeM, NSE AFR dividend yield, and NSE growth indices closed flat.
Analysts argued that corporate performance has remained resilient in the face of the lingering macroeconomic headwinds even as quoted companies continue to churn out improved earnings, giving investors insight into how they should position ahead of year-end and the 2021 corporate actions.
The Chief Executive Officer of Investdata Consulting Limited, Ambrose Omordion said: “Strength returns to the market on the back of few earnings released so far.
“We think that the ongoing season helped by the unchanged interest rates might support the new recovery move by the market.
“Investors seeking to preserve their capital and even profit from the ongoing recovery should play fundamentally sound stocks selling at a high margin of safety. This is the time to adopt value and growth investing.
“Money flow index revealed the entrance of the funds into equity space as corporate actions and high dividend yields continue to attract demand for blue-chip stocks and high cap equities in hot sectors with strong potential to grow sales in the current financial year.”
Codros capital said, “With the MPC meeting now out of the way. We expect investors’ attention to be focused on the bond auction results as they keep an eye on the movement of yields in the FI market.”
According to the analyst, as the full year 2020 earnings season gradually fades out, there are anticipations that sentiment would be influenced by developments in the macroeconomic landscape and corporate actions.
They urged investors to take positions in only blue-chip stocks, noting that an unimpressive macro story remains a significant headwind for corporate earnings.
A review of market performance last week showed that gains recorded by most blue-chip stocks, especially Julius Berger and Stanbic IBTC Plc, transactions on NSE reopened in an upbeat on Monday, causing market capitalisation to appreciate by N178 billion.
At the reopening of trading last week Monday, the ASI rose by 340.48 points or 0.89 per cent to 38,722.87 points. Investors gained N178 billion in value as market capitalisation went up to N20.260 trillion.
The upturn was impacted by gains recorded in medium and large capitalised stocks, amongst which are; Stanbic IBTC Holdings, BUA Cement, Julius Berger, Ardova Plc and UAC of Nigeria (UACN).
Reacting to market performance, analysts at United Capital Plc said: “We retain the expectation of a short-term rebound in the market. The improving investor sentiment (for the second consecutive week) indicates mild interest in key counters as investors begin to buy the dip but value stocks.
Vetiva Dealing & Brokerage said: “With market sentiment seemingly on the up, thanks to some positive earnings and dividend announcements, we expect tomorrow’s (today) session to be neutral to positive. However, we do not rule out the possibility of some profit-taking activities. Investors will also await feedback from the MPC meeting tomorrow (today), which we believe will shape the market direction for the rest of the week.”
On the price movement chart, 26 stocks appreciated while eight constituted losers charts. Julius Berger and Stanbic IBTC Holdings recorded the highest price gain of 10 per cent each, to close at N18.70 and N144.00, respectively, while UACN followed with a gain 6.67 per cent to close at N8.
The Nigerian equities market reversed previous gains to close on a downturn on Tuesday, as the ASI plunged by 0.05 per cent.
Precisely, the ASI went down by 17.90 absolute points, representing a decline of 0.05 per cent to close at 38,704.97 points. Also, market capitalisation value lost N9 billion to close at N20.251 trillion.
The downturn was driven by price depreciation in large and medium capitalised stocks amongst which are; Chemical and Allied Products (CAP), Julius Berger, Nigerian Breweries, MTN Nigeria Communications (MTNN), and NPF Microfinance Bank.
Analysts at Afrinvest Limited said: “We expect a mix of bargain-hunting and profit-taking in the local bourse in subsequent trading sessions.”
As measured by market breadth, market sentiment turned negative, as 21 stocks lost relative to 19 gainers.
CAP and Wapic Insurance followed with a gain 10 per cent each, to close at N22.00 and 55 kobo, respectively, while NPF Microfinance Bank followed with a gain of 9.94 per cent to close at N1.77kobo.
Julius Berger rose by 9.89 per cent to close at N20.55, while FTN Cocoa Processors appreciated by 9.30 per cent to close at 47 kobo.
On the other hand, Livestock Feeds led the losers’ chart by 9.52 per cent to close at N1.90 kobo.
The NSE reversed losses to close on an upward note on Wednesday, causing market capitalisation to appreciate by N199 billion.
At the closed of transactions on Wednesday, the ASI appreciated by 380.81 absolute points, representing an increase of 0.98 per cent to close at 39,085.78 points while the overall market capitalisation value gained N199 billion to close at N20.450 trillion.
The upturn was driven by price appreciation in large and medium capitalised stocks amongst which are; Dangote Cement, Stanbic IBTC Holdings, MTN Nigeria Communications (MTNN), Guinness Nigeria and Unilever Nigeria.
On the price movement chart, 21 stocks recorded price appreciation while 17 constituted the losers’ chart. Stanbic IBTC Holdings recorded the highest price gain of 9.99 per cent to close at N48.45 kobo while NPF Microfinance Bank followed with a gain of 9.6 per cent to close at N1.94 kobo.
Cornerstone Insurance rose by 8.93 per cent to close at 61 kobo. Guinness Nigeria appreciated by 8.76 per cent to close at N27.30 kobo.
Oando gained 8.68 per cent to close at N3.38, per share. On the other hand, MRS Oil Nigeria led the losers’ chart by 9.70 per cent to close at N12.10 kobo.
Wapic Insurance followed with a decline of 9.09 per cent to close at 50 kobo while Lafarge Africa shed 7.11 per cent to close at N20.90 kobo.
Africa Prudential shed 5.45 per cent to close at N5.20, while Livestock Feeds depreciated by 4.74 per cent to close at N1.81 kobo.
Volume of shares traded declined marginally by 11.8 per cent to 361.903 million units, valued at N5.702 billion, and exchanged in 4,018 deals.
Transactions in the shares of Union Bank of Nigeria (UBN) topped the activity chart with 79.346 million shares valued at N420.533 million. Guaranty Trust Bank followed with 72.620 million shares worth N2.259 billion, while Veritas Kapital Assurance traded 50.247 million shares valued at N10.525 million.
Ekocorp Plc traded 20 million shares valued at N120 million, while Zenith Bank transacted 16.675 million shares worth N367.031 million.
The bulls maintained dominance on the equity sector of the NSE on Thursday, as more blue-chip stocks appreciated, resulting in a further increase in market capitalisation by N45 billion.
The ASI appreciated by 207.36 absolute points, representing an increase of 0.53 per cent to close at 39,293.14 points. Also, market capitalisation gained N45 billion to close at N20.558 trillion.
The upturn was driven by price appreciation in large and medium capitalised stocks amongst which are; Stanbic IBTC Holdings, MTN Nigeria Communications (MTNN), GlaxoSmithKline Consumer Nigeria, UPDC Real Estate Investment Trust and Lafarge Africa. Market sentiment was positive, as 23 stocks appreciated while 14 constituted the losers.
Last week, a turnover of 1.530 billion shares worth N21.311 billion was recorded in 20,016 deals by investors on the floor of the exchange, up from a total of 2.342 billion shares valued at N19.272 billion that changed hands in 20,173 deals during the preceding week.
The financial services industry (measured by volume) led the activity chart with 1.096 billion shares valued at N12.294 billion traded in 11,106 deals; thus contributing 71.67 per cent to the total equity turnover.