Bullish week for equities as investors react to corporate activities
IT WAS A BULLISH WEEK for equities which saw the domestic market clocking five full days of trading with investors busy reacting to corporate activities and helping it to post positive performance.
Specific actions by investors included buying interest in GUARANTY (+8.2%), STANBIC (+10.0%) and SEPLAT (+12.8%). As a result, the NSE All-Share Index closed in the green on all trading sessions, rising 141 basis points (bps) week on week to settle at 25,041.89 points. Similarly, Year-toDate loss eased to -6.7% while market capitalisation rose N181.6 billion week on week to N13.1 trillion.
Activity level strengthened as average volume and value rose 51.5% and 21.4% to 213.0 million units and N2.2 billion respectively being supported by the three trading sessions from last week. The top traded stocks by volume were FBN Holdings (121.5 million units), ACCESS (77.3 million units) and TRANSCORP (54.7 million units) while PRESCO (N1.3 billion), GUARANTY (N1.1 billion) and MTNN (N983.7 million) led by value.
However, performance across sectors was bullish as five out of six indices trended northward during the week. The Banking index led gainers, going up 4.9 percent on the back of sustained buying interest in STANBIC (+10.0%), GUARANTY (+8.2%) and UBA (+5.6%). Trailing behind, the Oil & Gas and Consumer Goods indices rose 4.8 percent and 0.7 percent respectively on account of bargain hunting in SEPLAT (+12.8%), FLOURMILL (+13.2%) and GUINNESS (+8.5%).
Although, price appreciation in MTNN (+0.5%), CUTIX (+4.8%) and BUACEMENT (+0.3%) drove the AFR-ICT and Industrial Goods indices higher by 0.3 percent and 0.1 percent respectively. Conversely, the Insurance index was the lone laggard, down 0.3 percent as investors took profits on CUSTODIAN (-9.1%) and NEM (-6.5%).
Investor sentiment as measured by market breadth (advance/decline ratio) strengthened to 2.7x from the 0.9x recorded in the previous week as 40 stocks advanced against 15 that declined. The top performing stocks for the week were NEIMETH (+21.3%), UAC-PROP (+18.5%) and FLOURMILL (+13.2%) while UACN (-11.4%), TOTAL (-9.9%) and CUSTODIAN (-9.1%) were the laggards.
This week, analysts at Afrinvest Research say they expect a mixed performance as investors react to more corporate earnings releases. However, given the bullish performance in the past week, some more profit-taking activities are expected this week.
Analysts at Cordros Capital said “our view continues to favour cautious trading as risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions
“Thus, we continue to advise investors to seek trading opportunities in only fundamentally justified stocks.”
This stand is also corroborated by analysts at Investdata Consulting Limited who that because the market is still volatile, waves of profit-taking should be expected to immediately follow short moments bull run as investors are being careful not to get trapped in one position, therefore trading with short term mindsets.
The analysts said; “For immediate liquidity or cash, we advise that you trade low priced stocks with serious caution to avoid being trapped. However, the market’s high dividend yield continues to attract buying interests, as few audited and unaudited corporate earnings will hit the market, going forward.
“This is despite the likely continuation of selloffs. Investors are buying to increase their positions in undervalued stocks on H2 numbers. It is also against the backdrop of the fact that the capital wave in the financial markets may persist in the midst of relatively low-interest rates in the money market, high inflation, and unstable economic outlook for 2020.
“Again, the current undervalued state of the market offers 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 going forward.
“Also, traders and investors need to change their strategies, because of the NSE’s pricing methodology, the CBN directives, and their impact on the economy in the nearest future.”
Meanwhile, with the earnings reporting season gradually coming to end, experts said there are opportunities still available as sectoral rotation continues, while sectors that have suffered oversold so far offer attractive risk-reward buyopportunities and outlook for considerable short, medium and long term investments.
The week closed with a total turnover of 1.065 billion shares worth N10.798 billion in 20,482 deals were in contrast to a total of 421.984 million shares valued at N5.337 billion that exchanged hands previous week in 11,801 deals.
The Financial Services industry, measured by volume, led the activity chart with 677.301 million shares valued at N5.070 billion traded in 10,386 deals; thus contributing 63.59 per cent and 46.95 per cent to the total equity turnover volume and value respectively.
The conglomerates industry followed with 153.384 million shares worth N580.216 million in 894 deals. The third place was the Industrial Goods industry, with a turnover of 57.404 million shares worth N861.263 million in 1,671 deals.
The week’s record also showed that in terms of trade volume, trading in the top three equities namely FBN Holdings Plc, UACN Plc and Access Bank Plc (measured by volume) accounted for 320.196 million shares worth N1.802 billion in 2,639 deals, contributing 30.06 per cent and 16.69 per cent to the total equity turnover volume and value respectively.