Analysts say MPC outcome will set the tone for new market direction
Investors continued to position for dividend-paying stocks, last week, triggering more bargain-hunting activities on the equities sector of the Nigerian Exchange Limited (NGX) as the all-share index (ASI) rose above the 45,000 mark to close at 45,957.35 points – the highest level since January 2018.
Specifically, ASI and market capitalisation appreciated by 3.38 per cent to close the week at 45,957.35 and N24.761 trillion respectively.
All other indices finished higher, except NGX insurance index, which depreciated by 0.27 per cent while the NGX ASem, and NGX Sovereign bond indices closed flat.
The bullish momentum was propelled by foreign investors’ demand for Airtel Africa (which closed 10 per cent higher), Seplat (+9.4 per cent), Dangote Cement (+5.5 per cent), BUA Cement (+4.2 per cent), Nigerian Breweries (+4.4 per cent), Dangote Sugar Refinery (+4.4 per cent) and GTCO (+2.4 per cent).
Reacting to market performance, the Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion, said the high volume of transactions and price actions revealed the presence of buyers and return of institutional players to the market after the holidays.
“We expect a mixed sentiment to continue positioning in fundamentally sound stocks and profit-taking, as rallying oil price supports economic and market fundamentals.
“Also, investors are targeting dividend-paying stocks as they reposition portfolio ahead of the fourth quarter of 2021 and full-year audited earnings reports that may start hitting the market any moment from now.
“With all eyes on MPC meeting outcome, as inflation reversed up to 15.62 per cent and other economic data, also noteworthy is the oil price that remains above $74 projection of IMF at $88.22, while the International Monetary Fund (IMF) is calling for a hike in interest rate and further devaluation of Naira. We expect a mixed sentiment to continue positioning in fundamentally sound stocks and profit-taking,” he said.
Vetiva Dealing and Brokerage said: “This week, the market was lifted by trades in names like Seplat, Transcorp and Dangote Cement while being dragged by sell pressure seen mostly in the insurance sector. We expect the latter to persist into next week amid profit-taking activities.”
Cordros Capital said: “In the week ahead, we believe investors will be focused on the outcome of the MPC meeting to gain further clarity on the movement of yields in the FI market. Consequently, we expect a “choppy theme” as cautious trading will likely dominate the market.
“Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings.”
The financial services industry (measured by volume) led the activity chart with 815.363 million shares valued at N7.1 billion traded in 10,736 deals; thus contributing 43.89 per cent to the total equity turnover volume and value respectively.
The ICT Industry followed with 596.58 million shares worth N845 million in 1,028 deals. The conglomerates industry ranked third with a turnover of 161.35 million shares worth N191.2 million in 983 deals.
Trading in the top three equities namely Computer Warehouse Group Plc, Transnational
Corporation of Nigeria Plc, FBN Holdings Plc (measured by volume) accounted for 810.748 million shares worth N2 billion in 1,499 deals, contributing 43.65 per cent to the total equity volume.
Consequently, a turnover of 1.858 billion shares worth N47.5 billion was recorded in 20,861 deals by investors on the floor of the Exchange, in contrast to a total of 1.600 billion shares valued at N32.7 billion that was exchanged in 22,607 deals as at January 15, 2022.
In addition, 28,084 units of Exchange Traded Products (ETPs) valued at N18.300 million were traded last week in 27 deals compared with a total of 26,091 units valued at N2.4 million transacted in 47 deals during the preceding week.
Also, a total of 2,290 units of bonds, valued at N2.291 million were traded this week in seven deals compared to 78,135 units valued at N78.6 million transacted last week in 25 deals.
Forty-seven equities appreciated during the week, higher than 33 equities in the previous week. 23 equities depreciated, lower than 35 equities in the previous week, while 86 equities remained unchanged lower than 88 equities recorded in the previous week.