The bears will maintain leadership on the Nigerian stock market this week as investors remain on the lookout for new stop rates, especially for 364-day bills.
Analysts at Cordros Capital Limited said: “with the first quarter (Q1), 2021 earnings season now out of the way, we believe a ‘choppy theme’ will be the order of the day as investors keep their gaze on yield movements in the fixed income (FI) market.
“The bears will likely maintain dominance as the absence of positive triggers will limit buying interest from the bulls. Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings.”
This week, analysts at Cowry Asset Management Limited expected the stock market to trade sideways as investors remain on the lookout for new stop rates, especially for 364-day bills. Hence, bargain hunters can seize the opportunity to position in dividend paying stocks, particularly those that offer above 10 per cent dividend yield.
Also, the chief operating officer of InvestData Consulting Limited, Mr Ambrose Omordion said: “we expect the mixed trend to continue on profit taking and portfolio adjustment on the strength of the numbers released recently amidst the rising infection rate of the novel coronavirus cases across the globe and the high yields in the fixed income market.
“We also expect economic data like the 2021Q1 GDP report, April Purchasing Managers’ Index and inflation among others to reveal the state of the economy and give direction. The banking sector remains attractive on the back of the prevailing low prices, despite the Q1 mixed numbers.”
He also pointed out that the market has moved out of its trading range, saying that the market may discount the prospects of high cap companies and some blue chip stocks, ahead of their earnings reports.
He, however, added that, the pullbacks offer bargain hunters and income investors fresh opportunities to reposition in high dividend yields and undervalued stocks, while looking out for quarterly numbers that would support recovery, saying that this is based on the fact that the rising fixed income yields may not be enough to scare all investors away from the equity market.
“Again, the way to go is to target dividend-paying stocks and fundamentally sound companies with growth prospects in 2021, looking the way of mispriced equities. This is especially given the rising oil prices that have so far supported the economy and equity market, despite the seeming improvement in the fixed income yield which had remained at negative real rate of return due to the subsisting high inflation,” Omordion said.
He explained further that “the current undervalued state of the market offers investors opportunities to position for the short, medium and long-term, which is why investors should target fundamentally sound, and dividend-paying stocks for possible capital appreciation in the new year.”
Meanwhile, in the just concluded week, the market shed 1.60 per cent on high capitalised stock. Market sentiment was negative as investors booked profit following the recent rise in share prices amid relatively positive corporates Q1 2021 financial results.
Bearish sentiments dominated the local bourse last week, as the bears took full advantage of the gains over the last two weeks in booking profit on bellwether stocks. Save for the last trading day of the week; the local bourse recorded losses in all of the week’s four trading sessions.
Accordingly, the All-Share Index shed 635.67 points or 1.60 per cent week-on-week (W-o-W) to close at 39,198.75 points. Similarly, market capitalisation fell N416 billion to close at N20.431 trillion.
The overall bearish performance was driven by profit-taking activities in bellwether stocks, MTN Nigeria Communications (MTNN), Dangote Cement, Stanbic IBTC Holdings and Lafarge Africa.
Breakdown across sub-sectors tracked showed that three out of the five indices closed in green zone; the NSE Oil/Gas index led the gainers by 5.98 per cent to 285.19 points buoyed by buying pressure on SEPLAT Petroleum Development Company (SEPLAT) shares. Similarly, the NSE Banking and the NSE Consumer Goods indices rose by 0.62 per cent each to 354.25 and 561.80 points, respectively. On the flip side, the NSE Insurance and the NSE Industrial indices fell by 2.20 per cent and 1.60 per cent to 197.06 points and 1,916.55 points.
Market breadth for the week was negative as 31 equities appreciated in price, 37 equities depreciated in price, while 92 equities remained unchanged. Royal Exchange led the gainers table by 22.64 per cent to close at 65 kobo, per share. Sovereign Trust Insurance followed with a gain of 17.39 per cent to close at 27 kobo, while Access Bank went up by 11.64 per cent to close to N8.15, per share.
On the other side, Linkage Assurance led the decliners table by 18.82 per cent to close at 69 kobo, per share. Courteville Business Solutions followed with a loss of 13.04 per cent to close at 20 kobo and NEM Insurance declined by 10.84 per cent to close at N181, per share.
The market opened for four trading days this week as the Federal Government of Nigeria declared Monday May 3, 2020 a public holiday to mark the Workers Day Anniversary. Meanwhile, a total turnover of 1.419 billion shares worth N15.918 billion in 18,459 deals were traded last week by investors on the floor of the Exchange, in contrast to a total of 1.441 billion shares valued at N10.883 billion that exchanged hands previous week in 19,614 deals.
The Financial Services Industry, measured by volume led the activity chart with 1.069 billion shares valued at N9.531 billion traded in 10,907 deals; contributing 75.34 per cent and 59.88 p cent to the total equity turnover volume and value respectively. The Industrial Goods Industry followed with 60.762 million shares worth N2.005 billion in 1,070 deals, while the Consumer Goods Industry traded a turnover of 57.023 million shares worth N1.029 billion in 2,831 deals.
Trading in the top three equities; Access Bank, FBN Holdings (FBNH) and Zenith Bank, measured by volume accounted for 609.988 million shares worth N6.593 billion in 4,870 deals, contributing 43.00 per cent and 41.42 per cent to the total equity turnover volume and value respectively.
On Exchange Traded Products (ETPs) platform, a total of 30,004 units valued at N1.704 million were traded last week in 11 deals compared with a total of 60,447 units valued at N1.069 million transacted previous week in 20 deals, while on the Bonds market, a total of 19,573 units valued at N21.027 million were traded last week in eight deals compared with a total of 44,354 units valued at N46.342 million transacted previous week in 19 deals.
