By Nkiruka Nnorom
AS the equities market continues to reel under the influence of bargain hunters and profit taking activity, market watchers have said that second quarter, 2017 (Q2’17) financial results of companies being expected will determine the direction of the market in the next couple of weeks.
They observed that the market has reached a resistant level and would need a new breather to move beyond where it is today.
“The market will move in a zig-zag direction this week. We are going to see marginal gains and marginal losses in the next few weeks. Then, when the second quarter reports begin to come out, that will now determine the direction of the market. The new breather could be the Q2 results. It could also be the outcome of the next Monetary Policy Committee, MPC, meeting,” said Mr Johnson Chukwu, Managing director/CEO, Cowry Asset Management Limited.
Analysts at Meristem Securities Limited also corroborated Chukwu’s view, saying that activities in the market would be largely driven by portfolio rebalancing activities in anticipation of half year, H1:2017, earnings releases.
Specifically, they said that there would be position taking in some large cap banking stocks, industrial goods sector and a marginal appreciation in the oil and gas sector in anticipation of H1:2017 financial scorecard as well as interim dividend declarations.
Financial Vanguard’s analysis of trading activities last week showed that the market closed the week in the red zone much in line with analysts’ expectation. At the end of the week’s trading, equities capitalisation dropped by 2.3 per cent to N11.187 trillion from N11.452 trillion previous week.
The All Share Index, ASI, fell by 1.99 per cent to 32,459.17 points from 33,117.48 points, thereby bringing the year-to-date, YtD, return to 20.78 per cent.
All the sectoral indices closed lower during the week with the exception of the insurance and industrial goods sectors that appreciated by 1.10 per cent and 0.22 per cent respectively.
On the other hand, the banking index, the consumer goods and the oil and gas Index depreciated by 2.22 per cent, 4.03 per cent and 1.75 per cent to close at 389.12 points, 763.32 points and 317.50 points respectively.
There were 16 advancers and 50 laggards, with May & Baker Plc leading the laggards with 25.77 per cent decline to close at N2.88 per share. Neimeth International Pharmaceuticals Plc followed, dropping by 24.42 per cent to close at N0.65, while Conoil Plc, Flour Mills Plc and Julius Berger Nigeria Plc closed as the last on the top five losers chart, depreciating by 18.51 per cent, 15.63 per cent and 14.25 per cent to close at N36.31, N22.78 and N32.14 per share respectively.