By Nkiruka Nnorom
CAPITAL market operators have said that the equities market will record another week of negative returns following sell-off in big capitalised stocks and impact of the increase in banks’ Cash Reserve Ratio (CRR) by the Central Bank of Nigeria (CBN). This comes as investors lose N162 billion last week to the bearish market.
Securities dealers and other investment analysts had said that the recent increase in the CRR by the CBN to 27.5 percent from 22.5 percent is posing a challenge to the market.
Specifically, at the close of trading last weekend the market capitalisation declined to N14.456 trillion, down 1.12 percent from N14.618 trillion previous week, leading to a loss of N162 billion to investors.
Similarly, the All Share Index (ASI) plummeted by 1.11 percent to 27,755.87 points as investors dumped the shares of Nestle Nigeria Plc (-10%), MTN Communication Nigeria Plc (-9%) and Guinness Nigeria Plc (-15.56%).
Sectorial analysis shows that four of the major sectors closed in red with the exception of industrial goods sector that rose by 0.78 percent.
The consumer goods sector led the laggards, dropping by 6.5 percent, followed by the insurance sector, which fell by 2.2 percent. The oil and gas and the banking sectors declined by 0.7 percent and 0.2 percent respectively.
The negative sentiment also spread to the OTC market with the NASD OTC Securities Index (NSI) closing flat at 697.86 points. The NASD OTC market capitalisation, on the other hand, decreased to N501.59 billion from N501.73 billion, showing 0.03 percent decline.
Analysts at Cordros Capital said in their weekly report that the trend witnessed is likely to persist, as weakening market sentiment and the absence of positive catalysts are expected to pressure market returns.
Nonetheless, they advised investors to take positions in fundamentally justified stocks.
Meanwhile, the volume and value of traded stocks depreciated by 38.3 percent and 40.3 percent to 912.18 million units and N12.13 billion respectively.