Profit Taking Drags Stock Market Southwards

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WEEKLY REPORT

By Goddy Egene and Eromosele Abiodun

After the recent positive performance, the Nigerian equities market returned southwards last week following lack of positive news flow, continued delay of expected inflow of funds from foreign portfolio investors (FPI) and profit taking.

The market had witnessed massive upsurge in recent days following positive sentiments on the back of the introduction of a flexible foreign exchange regime by the Central Bank of Nigeria (CBN).

However, the market took a different direction last week when investors realised that portfolio investors are still maintaining a wait-and-see approach and decided to take profits on previous gains.

At the close of trades, the Nigerian Stock Exchange (NSE) All-Share Index and market capitalisation depreciated by 4.39 per cent to close the week at 29,305.40 and N10.065 trillion respectively.

Similarly, all other indices finished lower during the week, with the exception of the NSE ASeM Index that closed higher.

Meanwhile, traders believe the market will witness a measure of volatility this week as portfolio investors continue to foot drag.

For instance, analysts at Investment One Limited, said going into the week, they see a volatile market.

“With this said, we reiterate our positive medium to longer term outlook given the recent traction seen in both the monetary and fiscal policies. As such, we advise investors with a medium to longer term horizon to gradually build positions in quality names. While we view the floating of the naira as supportive of the market in the immediate, we highlight the possibility for profit taking following recent rally.  Also, we see the UKs vote to exit the EU which has sent a wave of uncertainty through global markets as a potential downside risk to market performance in the near term. Over the medium to longer term, we remain positive given the recent traction in fiscal and monetary policies of the government.  As such, we advise investors with a medium to longer term horizon to gradually build positions in quality names,” they said.

Daily Performance Summary

The market had opened the week on a negative note with the NSE ASI shedding 2.64 per cent to close at 29,840.23 points, corresponding to market capitalisation of N10.25trillion.The outcome was largely influenced by bearish sentiments towards bellwethers such as Dangote Cement Plc, Guaranty Trust Bank Plc and Zenith Bank Plc which cancelled out gains in PZ Cussons Plc, Julius Berger Nigeria Plc and Total Nigeria Plc. The trading session saw decline in volume of trade, down by 16 per cent to over 375 million units of stocks while value turnover climbed by nine  per cent to berth at N4.03billion. NEM Insurance Plc and Guaranty Trust Bank Plc recorded the largest volume of trade with over 90 million and 56 million units of stocks traded respectively. The Banking tracker (4.08 per cent) recorded the biggest loss, while the Oil & Gas (3.56 per cent), Industrial Goods (2.46 per cent) and Consumer Goods (0.58 per cent) indices also ended the session in the red.

The Nigeria bourse dipped further on Tuesday with the NSE-ASI falling by 0.89 per cent to close at 29,575.24 points. The   market capitalisation also declined by N91 billion to berth at N10.15 trillion. Sell pressure on Nigerian Breweries Plc, Guaranty Trust Bank Plc and Zenith Bank Plc largely accounted for the session’s outcome, offsetting gains in ETI Plc, Seplat Petroleum Development Company Plc and Julius Berger Nigeria Plc. With the exception of the industrial tracker which closed flat, other major sub-sector indices ended the session in the red. The Consumer Goods (1.65 per cent), Banking (1.61 per cent) and Oil &Gas (0.74 per cent) trackers closed negative. Market turnover weakened relative to yesterday level with both the volume and value of trades shedding 32 per cent and 18 per cent respectively as investors exchanged over 255 million units of stocks valued at N3.03 billion made in 4,182 deals.

Investors’ bargain hunting activities buoyed the equity market on Wednesday as the NSE ASI appreciated by 0.80 per cent to close at 29,812.91 points, compared with the depreciation of 0.89 per cent recorded the prior day. The appreciation recorded in the share prices of FBN Holdings Plc, Guaranty Trust Bank Plc, Transcorp Plc, Access Bank Plc and ETI Plc were mainly responsible for the gain recorded in the Index. Similarly, the market capitalisation appreciated by 0.80 per cent to close at N10.24 trillion, compared with the depreciation of 0.89 per cent recorded the previous day to close at N10.16 trillion.

The NSE ASI fell by 0.70 per cent on Thursday closing at 29,597.79 points with the market capitalisation also down by N74 billion to N10.16 trillion. The performance was influenced by Dangote Cement Plc, Nigerian Breweries Plc and ETI Plc, which cancelled out gains in Guinness Nigeria Plc, Oando Plc and Dangote Sugar Plc. Nonetheless the bearish trend in the index, the market turnover strengthened by 63 per cent to N4.65 billion while volume turnover rose by 12 per cent as investors exchanged over 342 million units of stocks in 4,078 deals. Contrary to the trend in Wednesday’s session, all the major sub-sector indices closed negative. The Banking (0.79 per cent), Oil & Gas (0.85 per cent), Industrial Goods (0.61 per cent) and Consumer Goods (0.51 per cent) trackers ended the session in the red.

The Nigerian bourse ended the week on a negative note last Friday with the benchmark indicator, NSE ASI down by 0.99 per cent. Friday’s session saw decline in both volume and value turnover by over 52 per cent and 45 per cent respectively as investors staked N2.25 billion on 189 million units of stocks. The Oil & gas (0.63 per cent) index was the lone gainer today while the Banking (0.93 per cent), Consumer Goods (2.38 per cent) and Industrial Goods (2.07 per cent) trackers closed down on account of sell-off by investors. The number of losers at 24 stocks exceeded the number of gainers at 21 stocks.

 

Market Turnover

During the week under review, a turnover of 1.469 billion shares worth N17.065 billion in 21,246 deals were traded by investors, down from a total of 2.387 billion shares valued at N26.381 billion that exchanged hands the prior week in 28,072 deals.

The Financial Services Industry led the activity chart with 1.169 billion shares valued at N10.241 billion traded in 12,697 deals, thus contributing 79.59 per cent and 60.01 per cent to the total equity turnover volume and value respectively.

The Conglomerates Industry followed with 133.613 million shares worth N300.892 million in 1,081 deals. The third place was occupied by the Consumer Goods Industry with a turnover of 110.745 million shares worth N4.904 billion in 3,495 deals.

Trading in the top three equities namely – Guaranty Trust Bank Plc, FBN Holdings Plc and Transnational Corporation of Nigeria Plc accounted for 523.549 million shares worth N6.539 billion in 5,223 deals, contributing 35.65 per cent and 38.32 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 12,695 units of Exchange Traded Products (ETPs) valued at N174,028.05 executed in 35 deals, compared with a total of 121,501 units valued at N90.716 million transacted the previous week in 34 deals.

A total of 2,979 units of Federal Government Bonds valued at N2.908 million were traded in 5 deals compared to a total of 9,439 units of Federal Government Bonds valued at N10.429 million transacted the prior week in 7 deals.

 

Gainers and Losers

Meanwhile, 22 equities appreciated  compared with, lower than 40 equities of the previous week. Fifty-two equities depreciated in price, higher than 32 equities of the previous week, while 106 equities remained unchanged lower than 108 equities recorded in the preceding week.

The top 10 gainers were: Julius Berger Nigeria Plc (N6.93), Conoil Plc (N3.45), Union Dicon Plc (N2.35), PZ Cussons  Plc (N1.42), Berger Paints Plc (74 kobo), Red Star Express Plc (36 kobo), Neimeth Plc (10 kobo), NEM Insurance ( eight  kobo),) Wema Bank Plc ( five kobo) and Law Union & Rock Plc (four kobo).

Conversely,  the top 10 losers were: Nigerian Breweries Plc (N13.90), Champion Breweries Plc (74 kobo),  Honeywell Plc (47 kobo), Smart Products Plc (26 kobo),  Transcorp Plc (23 kobo), Eterna Plc (33 kobo), UACN Property Development Plc (50 kobo), NAHCO (41 kobo), AG Leventis  and Unity Bank Plc (15 kobo apiece).