Pressure on equities defies earnings, index slumps by 0.69 per cent
DESPITE improved numbers in 2020 full year result churned out by quoted companies, sentiments remained weak in the equities market, as losses recorded in the shares of most highly capitalised stocks, especially Dangote cement, BUA cement and MTN Nigeria pulled the All Share lndex ( ASI) by 0.69 per cent .
At the close of transactions last week, the Nigerian Stock Exchange ( NSE) suffered seventh consecutive decline as the ASI and market capitalisation depreciated by 0.69 per cent to close the week at 38,382.39 and N20.082 trillion respectively.
However, all other indices finished higher with the exception of NSE Mainboard, NSE 30, NSE Insurance, NSE Consumer Goods, NSE Lotus II, NSE Industrial and NSE Growth Indices, which declined by 1.68. per cent, 0.99 per cent, 0.01 per cent, 1.46 per cent, 1.51 percent, 2.62 per cent and 0.25 per cent per cent respectively, while the NSE Sovereign Bond Index closed flat.
Analysts said the rising bond yields and TB rates have continued to scare investing public away from the market.
Last week, performance in the Secondary T- bills market liquidity levels remained strong all week to close at 602.6 billion despite the auctions.
The Central Bank of Nigeria ( CBN) mopped up 100 billion via OMO auction following maturities worth 143.4 billion.
The OMO sale was oversubscribed at 3.5x on average, with the 362- day instrument enjoying the most demand.
Analysts at Afrinvest said the strong demand is expected to be sustained in subsequent auctions due to robust system liquidity and attractive rates to lure FPIS.
On market performance this week, Vetiva research, said: "Given that both the MPC meetings and monthly bond auction are scheduled for next week, we expect the market to open the week on a quiet note, with most players waiting on the side- lines in anticipation of these two events. "Meanwhile, we expect the
OMO market to remain driven by oil prices and developments in the global macro space, while we foresee a quiet opening session, albeit with moderate sell- offs in the NTB space."
Vertiva Dealing and Brokerage firm said the domestic bourse was characterized by mixed sentiment during the week, as sell pressure persisted on the back of weak economic indicators, while cheap valuations and attractive dividend yields in the Banking space spurred some BUY interest towards the end of the week.
"With the expectation of further uptick in yields on short- dated instruments in the Fixed Income market, we anticipate further pressure in the equity market in the near term."
A review of market performance last week showed that sell pressures persisted on the NSE as more highly capitalised stocks depreciated in price, resulting to a further slide in market capitalisation by N45 billion.