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Appetite for value stocks to drive equities market this week

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By Nkiruka Nnorom

ON the backdrop of the negative sentiment that prevailed in the equities last week, which led to the loss of N200 billion to investors, investment analysts have predicted a rebound in activity as investors price in on value of stocks.

According to them, the macro-economic indicators still remain positive enough to propel activity to the positive direction.

The floor of Stock exchange

They, however, said that a reversal of event would be recorded in the oil and gas sector, which is expected to remain down-beat.

Commenting on this week’s expectations, analysts at Cowry Assets Management Plc, an investment banking firm, said: “This week, we expect the local bourse to close in the green territory as investors take advantage of the low prices of some fundamentally sound stocks.”

In their opinion, analysts at Cordros Capital insisted that despite continued sell-offs in the equities market, “still-strengthening macro-economic fundamentals remain suggestive of gains on the exchange.”

In the same vein, Meristem Securities, in its weekly review of the market said that though the market was largely down-beat across almost all the sectors last week, but the banking, consumer goods, industrial goods and insurance sectors would experience an upturn in performance.

Consumer goods, oil and gas sector to remain down-beat

On the oil and gas sector’s performance, they said: “Profit taking on Mobil Oil Nigeria Plc and the continued sell-offs on some other counters dragged the sector’s performance at the close of the week. In the absence of any significant news to change activities in the sector, we expect the sector’s performance to remain bearish in the week.”

Market capitalisation down 1.34%

A review of activity last week showed that the bears remained dominant on the Nigerian Stock Exchange, NSE, with the twin market indicators – the All Share Index, ASI, and the market capitalisation of all listed equities – falling by 1.34 percent apiece.

Specifically, the market capitalisation went down by N200 billion to close at N14.600 trillion from N14.860 trillion in the previous week, while the ASI closed lower at 40,472.45 points from 41,022.31 points, representing the highest loss since mid March.

Further analysis showed that negative return was posted across most sectors. The banking sector declined the most, falling by 2.80 percent on the back of sell-off in Skye Bank Plc, Diamond Bank Plc and Fidelity Bank, which declined by 19.15 percent, 18.42 percent and 17.24 percent respectively.

The oil and gas sector followed by 2.64 percent decrease on account of sell pressure in Forte Oil Plc (4.87%), Total Nigeria Plc (4.42%) and Mobil Oil Plc (3.72%). The industrial goods depreciated by 1.37 percent, while the insurance sectors went down by 0.80 percent. The Consumer Goods sector, however, inched up by 0.03 percent.

NASD OTC also down-beat

Similarly, activity in the NASD OTC Securities Exchange closed the week negative as the unlisted securities index decreased by 1.48 percent to close at  675.43 points as against  685.62 points last week. Consequently, total market capitalization shed 1.48 percent, closing lower at N457.08 billion compared to N463.96 billion in the previous week.

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