Capital market analysts said, following the latest trend in the Nigerian equities space, the market is likely to see mixed trading this week.
The new market environment of rising inflation, interest rates and the coming general elections call for new trading and investing strategies, as factors that kept the market in its oscillating trend remain unchanged. This is happening amidst the expectation of interim dividend-paying corporate earnings, among others game-changers.
The chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion, said: “we expect cautious and mixed trading as players reacts to rate hike in the midst of earnings expectation and interim dividend.
“We note also the flow of funds into the fixed income segment on the rate hike by the CBN, as sector rotation persists. Analysts are also on the lookout for second quarter (Q2) GDP and flow of funds amid oil prices oscillation. Also, the market continues to interpret the rising inflation in relation to the crude oil price and other factors, in the midst of profit-taking and portfolio rebalancing.
“This will result in market players targeting fundamentally sound and dividend-paying stocks in the hope of dividend announcements. This is happening amidst the expectation of interim dividend-paying corporate earnings, among others game-changers.”
Analysts at Cordros Securities Limited said: “in the interim, we believe the full swing of the H1, 2022 earnings season will dictate market sentiments and possibly drive positive performance as investors hunt for bargains in fundamentally sound stocks with a consistent history of interim dividend payments.
“Notwithstanding, we envisage intense selling pressures on stocks of companies that grossly underperform in H1, 2022. Overall, we reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings.”
In the new week, analysts at Cowry Assets Management Limited expected the market to trade in a mixed sentiment as the dividend season draws near for investors to continue their profit-making activities, saying “we will continue to advise investors to trade on companies’ stocks with sound fundamentals and a positive outlook.”
On market outlook, GTI Securities Limited said: “the stock market sell-off persists and investors’ appetite dampens following the interest rate hike. We expect attention to shift to the fixed income market as the effects of the rate hike lingers.”
Last Week’s Trading Activities
The bears resurfaced in the local bourse last week. The All-Share Index dipped by 235.20 points or 0.45 per cent week-on-week (W-o-W) to close at 51,979.92 points. Similarly, market capitalisation dipped N127 billion to close at N28.031 trillion.
Notably, profit-taking activities witnessed in Nigerian Breweries, International Breweries, Lafarge Africa and Zenith Bank stocks led the weekly loss. Analysing by sectors, the Banking index recorded a weekly loss of 4.1 per cent. Consumer Goods index shed 2.0 per cent, while Industrial Goods index depreciated by 0.5 per cent W-o-W. On the flip side, the Oil & Gas index rose by 3.8 per cent and Insurance index up by 1.8 per cent W-o-W.
The market breadth for the week was negative as 19 equities appreciated in price, 36 equities depreciated in price, while 101 equities remained unchanged. Cornerstone Insurance led the gainers table by 26.32 per cent to close at 72 kobo, per share. Seplat Energy followed with a gain of 10.00 per cent to close at N143.50, while Linkage Assurance went up by 9.43 per cent to close to 58 kobo, per share.
On the other side, Nigerian Aviation Handling Company (NAHCO) led the decliners table by 33.73 per cent to close at N5.50, per share. Caverton Offshore Support Group followed with a loss of 16.79 per cent to close at N1.14, while Honeywell Flour Mill declined by 14.55 per cent to close at N2.35, per share.
Overall, a total turnover of 917.190 million shares worth N14.803 billion in 19,513 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 504.322 million shares valued at N7.517 billion that exchanged hands prior week in 12,393 deals.
The Financial Services Industry (measured by volume) led the activity chart with 648.207 million shares valued at N6.258 billion traded in 9,293 deals; contributing 70.63 per cent and 42.27 per cent to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 102.605 million shares worth N3.211 billion in 3,016 deals, while the Conglomerates Industry pulled a turnover of 36.218 million shares worth N193.474 million in 562 deals.
Trading in the top three equities namely United Bank for Africa (UBA), Guaranty Trust Holding Company (GTCO) and Access Holdings (measured by volume) accounted for 355.624 million shares worth N4.120 billion in 3,486 deals, contributing 38.77 per cent and 27.83 per cent to the total equity turnover volume and value respectively.