Trading floor of the Nigeria Stock Exchange

By Goddy Egene and Eromosele Abiodun

Despite rallying in the last two trading days of last week, the bears sustained their hold on the Nigerian equities market, driving stocks prices further southward.
It was another week to forget for investors but the last two days of the week saw a major rally as investors build position ahead of probable positive earnings release this week.

The market was volatile in three trading days as demand outstripped supply while most investors maintained cautious approach.

At the close of trades for the week, the NSE All-Share Index and market capitalisation depreciated by 0.83 per cent and 0.80 per cent to close the week at 24,228.79 and N8.336 trillion respectively.

Similarly, all other indices finished higher during the week, with the exception of NSE Premium Index, NSE 30 Index, NSE Banking Index, NSE Insurance Index and NSE Pension Index that depreciated by 0.83 per cent, 3.01 per cent, 0.35 per cent, 2.45 per cent, 1.25 per cent and 1.25 per cent respectively.

The previous week, Nigerian equities had closed in the red, losing 1.04 per cent week-on-week (w/w), despite the market closed positive in three of the last five trading days. This was driven by significant sell offs in the Industrial sector. Market activity had declined substantially at the tail end of the week as both market volume and value halved from 336million units worth N1.95 billion mid-week to 172 million units worth N925 million the previous Friday. This represents the lowest level of activity so far this year.

Responding to the development in the market, analysts at InvestmentOne Limited have predicted that the market will remain volatile and enjoined investors to tread cautiously and take position in quality name ahead of earning season.

“We expect activity to remain low with the continued absence of FPIs and the majority of PFAs due to the CBN’s FX management regime even in the face of miniscule real return in the fixed income space. In our opinion, we believe the market will likely remain muted as the market is starved of needed liquidity. However, we advise investors, with a medium to long term horizon, to be cautious while building positions in quality names, ”they stated.

Daily Performance Analysis

The market opened the week last Monday on a decline following weak appetite. Consequently, the NSE All Share Index decreased marginally by 0.04 per cent to close at 24,423.37 points. The depreciation recorded in the share prices of UBA Plc, Zenith Bank Plc, Nigerian Breweries Plc, Guaranty Trust Bank Plc, and Oando Plc were mainly responsible for the loss recorded in the index. Similarly, the market capitalization depreciated marginally by 0.04 per cent to close at N8.399 trillion, compared with the appreciation of 0.70 per cent recorded the previous Friday to close at N8.402 trillion. The total value of stocks traded on the floors of the NSE on the day was N5.99 billion, up by 547.31 per cent from N925.39 million traded the prior Friday.

The Nigeria bourse closed in the red again on Tuesday as negative investor sentiment persisted. The ASI lost 1.36 per cent to end the day at 24,090.98 points with corresponding market capitalisation of N8.29 trillion. The day’s outcome came on the back of losses in Diamond Bank Plc, Champion Breweries Plc and Oando Plc, which offset gains in WAPCO Plc, Unity Bank Plc, and Honeywell Flour Plc. Activity level declined significantly relative to previous trading session with volume and value traded down by 94 per cent and 79 per cent respectively. Hence, investors exchanged 201million units of stocks worth N1.2 billion in 2,559 deals compared to 3.5 billion units of stocks worth N5.9 billion in previous session. Similarly, major sub-sector indices with the exception of consumer goods index, which rose 0.44 per cent, ended the day in the red.

The equities market closed in the red yet again on Wednesday as the ASI shed 0.86 per cent to end the day at 23,883.34 points corresponding to a market capitalisation of N8.22 trillion. Sell-off in Guaranty Trust Bank Plc, Zenith Bank Plc, and Guinness Nigeria Plc was largely responsible for the negative close offsetting gains in ETI Plc, Flour Mills Nigeria Plc and Nigerian Breweries Plc. Investors exchanged 270 million units of stocks valued at N1.2 billion in the day’s session. This represents a 34 per cent upsurge in volume traded and a 3 per cent decline in value traded relative to previous trading session. With the news of FBN Holdings Plc profit warning hitting the market, banking sub-sector witnessed the most sell-off losing 2.96 per cent.

However, positive sentiments raised the equity market on Thursday, as the NSE All Share Index appreciated by 0.67 per cent to close at 24,042.73 points. The appreciation recorded in the share prices of Dangote Cement Plc, ETI Plc, Stanbic IBTC Plc, Seplat Plc, and Zenith Bank Plc were mainly responsible for the gain recorded in the Index. Similarly, the market capitalisation appreciated by 0.67 per cent to close at N8.27 trillion, compared with the depreciation of 0.83 per cent recorded the previous day to close at N8.22 trillion. The total value of stocks traded on the floors of the NSE on the day was N1.54 billion, up by 26.40 per cent from N1.22 billion traded the prior day.

On Friday, the Nigeria bourse sustained Thursday’s bullish run as investors maintain a positive outlook on stocks probably in anticipation of corporate earnings release in the coming week. Both ASI and market capitalisation were up by 0.77 per cent closing the day at 24,228.79 points and N8.36 trillion respectively. Positive sentiment toward the stocks of Nigerian Breweries Plc, Dangote Cement Plc and FBN Holdings Plc influenced the outcome of Friday’s session helping to counter losses in StanbicIBTC Plc, Guaranty Trust Bank Plc and Flour Mills Nigeria Plc. Similarly, gains were recorded across all major sub-sector indices with Consumer Goods (0.63%), Banking (0.77%), Oil and Gas (0.68%) and Industrial (0.33%) ending the session positive. Activity level strengthened slightly with 12 per cent and 3 per cent appreciations in volume and value traded. As such, investors expended around N1.72 billion on over 280 million units of stocks in 2,771 deals.

Market Turnover
Meanwhile, a total of 4.476 billion shares worth N11.742 billion in 14,124 deals were traded last week by investors on the floor of the Exchange in contrast to a total of 1.202 billion shares valued at N9.641 billion that exchanged hands the previous week in 13,712 deals.

The Consumer Goods Industry (measured by volume) led the activity chart with 3.331 billion shares valued at N5.695 billion traded in 2,511 deals; thus contributing 74.42 per cent and 48.50 per cent to the total equity turnover volume and value respectively.

The Financial Services Industry followed with 1.008 billion shares worth N3.752 billion in 8,730 deals. The third place was occupied by the Oil and Gas Industry with a turnover of 55.332 million shares worth N416.383 million in 1,024 deals.
Trading in the Top Three Equities namely – Tiger Branded Consumer Goods Plc, FCMB Group Plc and FBN Holdings Plc.(measured by volume) accounted for 3.736 billion shares worth N4.872 billion in 2,443 deals, contributing 83.47 per cent and 41.49 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 14,844 units of Exchange Traded Products (ETPs) valued at N14.134 million executed in 29 deals, compared with a total of 93,518 units valued at N1.158 million transacted the previous week in 48 deals.

A total of 4,990 units of Federal Government Bonds valued at N5.799 million were traded in 2 deals compared to a total of 150,000 units of Federal Government Bonds valued at N169.326 million transacted the previous week in 2 deals.

Gainers and Losers
Meanwhile, the price movement chart of the NSE showed that a total of 21 equities appreciated in price during the week, lower than 22 equities of the previous week. Thirty-five equities depreciated in price, lower than 37 equities of the previous week, while 134 equities remained unchanged, higher than 131 equities recorded in the previous week.

The top 10 gainers were: Seplat Plc (N37.52), Lafarge Africa Plc (N4.52), Unity Bank Plc (7 kobo), Larn Africa Plc (9 kobo), Eterna Plc (14 kobo) Cutix Plc (7 kobo), Tiger Branded Consumer Plc (6 kobo), Ikeja Hotel (13 kobo), McNichols (5 kobo) and AG Leventis (3 kobo).

On the other hand, the top 10 losers included: Skye Bank Plc (11 kobo), Livestock Feeds Plc (17 kobo), Diamond Bank Plc (19 kobo), Fidson Plc (25 kobo), FCMB Plc (8 kobo), Neimeth Plc (6 kobo), Oando Plc (28 kobo), Fidelity Bank Plc (7 kobo), Guaranty Trust Bank (97 kobo), and Flour Mills Plc (97 kobo).