ASI down 1.55% as Profit-taking Dominates Trading at NSE

22 Apr 2013

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Trading session in NSE

By Goddy Egene and Eromosele Abiodun

The much awaited rally in the earnings season has failed to last, as the market again closed last week weaker despite stronger-than-expected results leased by some banks.

The decline in the value of the Index last week was on the heels of losses recorded in the banking and manufacturing sub-sectors, which was fuelled by massive profit-taking activities.
The equities market had the previous week headed southward as speculative investors engaged in broad sell down of stocks especially the high-capped securities.
The profit-taking activity had a negative impact on the securities in the financial services sector that have earlier witnessed significant price appreciations in the early period of the year.

Trading had last Monday resumed on a good note as activities on the exchange increased by 10 per cent in relation to volume in conjunction with growth in market indices as investors bought 384.603 million shares worth N5.346 billion in 5,115 deals compared to 350.243 million units of shares worth N4.515 billion exchanged in 5,924 deals the previous Friday.

The bears returned to the market place on Tuesday as the benchmark index closed 0.59 southward.
The market returned to positive territory on Wednesday as trading activities increased by 118 per cent in relation to volume. All market indicators also close firmer as investors bought 766.565 million shares worth N9.353 billion in 6,175 deals compared to 352.153 million units of shares worth N3.596 billion exchanged in 6,705 deals on Tuesday.

However, the market slumped again on Thursday after staging a comeback the previous day following increased profit taking activities by speculative investors. In all, activities decreased by 54 per cent in relation to volume in drop in market indices as investors bought 355.018 million shares worth N5.854 billion in 5,193 deals compared to 766.565 million units of shares worth N9.353 billion exchanged in 6,175 deals on Wednesday.

At the close of business last Friday, most market indicators closed firmer. However, investors bought 255.421 million shares worth N2.529 billion in 4,452 deals compared to 355.018 million units of shares worth N5.854 billion exchanged in N5.854 deals on Thursday.

Consequently, most major indicators closed the week lower, led by the twin market gauge: the ASI and the market capitalisation.
The NSE All-Share Index declined by 1.55 per cent to close on Friday at 32,993.97 while the market capitalisation decreased also by 1.55 per cent to close at N10.547 trillion. Also, the NSE 30 Index depreciated by 1.58 per cent to close at 1,574.85.
Other NSE sectoral indices that depreciated during the week included; NSE Consumer Goods, NSE Banking, NSE Oil and Gas, NSE-Lotus II and NSE Industrial Goods by 1.43 per cent,3.74 per cent, 1.77 per cent, 0.81 per cent and 1.03 per cent respectively. However, NSE Insurance appreciated by 1.03 per cent.

Market Turnover
Analysis of the trading result for the week under review showed that turnover of 2.114 billion shares worth of N26.678 billion in 27,624 deals were transacted by investors on the floor of the Exchange in contrast to a total of 2.191 billion shares valued at N24.942 billion that exchanged hands the previous week in 33,100 deals.
The Financial Services sector came top and accounted for 1.759 billion shares valued at N14.642 billion exchanged hands by investors in 16,902 deals. Consumer Goods sector followed in the activity chart with 121.622 million shares valued at N9.411 billion traded in 4,391 deals.

Similarly, the banking subsector of the Financial Services sector was the most active during the week with 1.435 billion shares amounting to N11.904 billion traded in 12,764 deals. The volume of shares sold in the banking subsector was largely driven by activities in the shares of Wema Bank Plc, Skye Bank Plc and Zenith Bank Plc.

Trading in the shares of the three banks accounted for 627.601 million shares worth N4.384 billion exchanged by investors in 3,720 deals contributing 29.691 per cent to the total equity turnover volume recorded during the week.
Also, in the course of the week, 6,021 units of NewGold Exchange Traded Funds (ETFs) valued at N12.944 million were executed in 21 deals compared with a total of 510 units valued at N1.220 million transacted last week in 7 deals.
Similarly, 4,140 units of FGN bonds and State bond valued at N4.471 million were traded during the week in 30 deals in contrast to 3,310 units valued at N4.049 million transacted last week in 20 deals.

Gainers and Losers
The price movement chart of the NSE displayed a total of 28 equities appreciated in prices during the week higher than 20 equities of the preceding week. 49 equities depreciated in price lower than 59 equities of the preceding week, while 119 equities remained constant higher than 117 equities of the preceding week.

Other top gainers were: PZ Cusson Nigeria Plc (N6.50), Forte Oil Plc (N1.41), Cement Company of Northan Nigeria Plc (N1.16), A.G Leventis Nigeria Plc (N0.47), UBA Plc (N0.40) and B.O.C Gases Plc (N0.50).
Conversely, top losers included: Capital Hotel Plc (N1.18), Dangote Sugar Refinery Plc (N1.33), Costain (WA) Plc (N0.40), John Holt Plc (N0.36), DN Meyer Plc (N0.32 ), IHS  Plc (N0.32) and UTC Nigeria Plc (N0.10).
Lifting of Ecobank Suspension

During the week, the Securities and Exchange Commission (SEC) lifted the suspension it placed on Ecobank Nigeria Plc. The commission had last month suspended Ecobank from acting as a receiving banker in the market for allegedly conniving with Arian Capital Management to convert 555,555 shares of First Bank of Nigeria belonging to Avil Services Limited, a client of Arian Capital.
The regulator said that when the violation was discovered, it demanded for information from Ecobank, which the bank failed to provide; hence the suspension.

But Ecobank denied colluding with Arian Capital to defraud its client, saying it had communicated its position to SEC. According to bank, the regulator had given a time frame for it to comply with its directive.
An official of SEC confirmed to the lifting of the suspension, saying “I believe the bank has complied with the directive and the suspension has been lifted.”

Ecobank had explained that in 2007, it granted a margin loan facility to Arian Capital Management for on-lending, secured by quoted shares. The shares were to be in the Central Securities Clearing Systems Limited account in the joint names of Arian Capital and Ecobank.

The margin loan to Arian Capital, the bank said, became delinquent and was sold to Asset Management Corporation of Nigeria (AMCON) together with the collateral.

Ecobank said: “Avil Services complained to SEC primarily against Arian Capital for the return of its shares. Arian Capital’s position is that Avil Services signed an agreement with Arian Capital that its shares would be used as collateral with Ecobank. The bank also provided its position formally to SEC… But SEC insisted that the bank should replace the shares valued at N11million. The value of the shares has been issued in favour of Avil Services Limited and handed over to SEC.”
Outlook for the Week

Meanwhile, analysts at FSDH Merchant Bank Limited believe investors have factored expected earnings into current market price of companies releasing their results, hence the less-than-impressive performance of the market.

“The market did not show much enthusiasm to the release of corporate actions and some impressive results that have been released in recent times. We believe investors had factored the expected earnings into the pricing of these stocks. Hence, the eventual release of the result could not spark off the much desired change. As more result trickle into the market in subsequent weeks, we are most likely to see a haphazard trading pattern.

“We urge investors to stick to stocks with good fundamentals. Investors are advised to consider investment opportunities in the under listed stocks, as they have good fundamentals that can generate good returns in the medium to long- term, "said FSDH.
On their part, analyst at BGL Securities expects the profit taking activities that dominated the market last week to continue in the days ahead.

“We expect more profit taking activities to continue in the coming week as investors continue to rake in profits on high priced stocks. Furthermore, we anticipate more first quarter results release from banks as some have already started. This could trigger further interest by investors,” BGL said.

Tags: Nigeria, Featured, Business, NSE

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