Capital market analysts are expecting bearish trading activities to continue on the Nigerian stock market pending any significant changes in the economic conditions.
The market awaits this week’s meeting of the Central Bank of Nigeria (CBN) Monetary Policy Committee, because many players stay on the fence, waiting to confirm direction before jumping in, as outlook for the economy and the financial market remains unpredictable.
However, there are sectors, industries and individual stocks that are still seeing positive activities from traders and investors. Those are stocks players should be paying attention to.
Going into the new week, Cowry Assets Management Limited expected the market to sustain its bearish run as we head into the political campaign season and in the absence of a major catalyst to trigger bullish momentum as investors seeking alpha rebalance their portfolios in anticipation of the direction of the MPC next week.
“However, we continue to advise investors to trade on companies’ stocks with sound fundamentals and a positive outlook amid the macro-dynamics which remains a headwind,” Cowry Asset stated.
The chief operating officer of InvestData Consulting Limited, Mr Ambrose Omordion said that, “we expect a mixed trend as reversal is underway on bargain hunting and cautious trading as investors digest the latest inflation data and recent results from the banking sector, especially those with interim dividend payout amidst MPC meeting, while portfolio rebalancing continues on bargain hunting in the midst of the worsening sovereign risks.
“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 August CPI and flow of funds amid oil prices oscillation.”
Analysts at Cordros Securities Limited said, “in the week ahead, we believe investors will be focused on the outcome of the MPC meeting scheduled to hold this week to gain further clarity on the movement of yields in the fixed income (FI) market.
“As a result, we envisage an extension of the cautious trading theme, especially from domestic investors. Notwithstanding, 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 mirrored the downbeat mood across global stocks last week as investors’ sentiments remained dampened for another week, except for Tuesday which performed mildly.
The claws of the bears in the just concluded week dragged the All-Share Index (ASI) by 0.71 per cent week on week (W-o-W) to close at 49,190.34 points, as investors seeking alpha exhibited apathy for Nigerian stocks. Similarly, market capitalisation decreased by N242 billion to close at N26.445 trillion.
Sectoral performance was broadly negative following losses in the Oil & Gas index by 4.68 per cent W-o-W. Industrial Goods index recorded a weekly loss of 3.92 per cent, while Insurance and Consumer Goods indices shed 2.08 per cent and 0.16 per cent W-o-W respectively. On the other side, the Banking index gained 2.27 per cent for the week.
The market breadth for the week was negative as 17 equities appreciated in price, 42 equities depreciated in price, while 97 equities remained unchanged. Vitafoam Nigeria led the gainers table by 12.25 per cent to close at N22.45, per share. Fidelity Bank followed with a gain of 10.85 per cent to close at N3.78, while Unity Bank went up by 10 per cent to close to 44 kobo, per share.
On the other side, Academy Press led the decliners table by 22.73 per cent to close at N1.70, per share. Nigerian Exchange Group followed with a loss of 13.92 per cent to close at N17.00, while Cadbury Nigeria declined by 13.82 per cent to close at N11.85, per share.
Overall, a total turnover of 562.856 million shares worth N9.438 billion in 16,013 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 719.398 million shares valued at N8.004 billion that exchanged hands prior week in 17,444 deals.
The Financial Services Industry (measured by volume) led the activity chart with 381.958 million shares valued at N4.551 billion traded in 8,627 deals; contributing 67.86 per cent and 48.21 per cent to the total equity turnover volume and value respectively. The ICT Industry followed with 59.345 million shares worth N2.480 billion in 1,272 deals, while the Services Industry traded a turnover of 32.212 million shares worth N95.807 million in 607 deals.
Trading in the top three equities namely Zenith Bank, NGX Group and Guaranty Trust Holding Company (GTCO) accounted for 183.929 million shares worth N3.499 billion in 3,628 deals, contributing 32.68 per cent and 37.07 per cent to the total equity turnover volume and value respectively.