Market rebounds to gain N137.4bn
By Peter Egwuatu
Positive sentiments returned to the equities market on the Nigerian Exchange Limited, NGX last week as the gradual release of corporate earnings bolstered buying interests in dividend-paying stocks.
Consequently, the All-Share Index advanced by 0.7 per cent Week-on-Week, W-o-W, to close at 38,811.11 points. As a result, the Month-to-Date, MtD gain increased to 0.7 per cent, while the Year-to-Date, YtD, loss moderated to -3.6 per cent as market capitalisation increased by N137.4 billion to N20.2 trillion.
However, activity levels were weaker, as trading volumes and value declined by 30.1 per cent W-o-W and 32.0 per cent W-o-W, respectively. Notably, foreign investor’s interest in Airtel Africa led to the 57 per cent surge in the stock and this drove the weekly gain.
Sectoral performance was broadly negative following declines in the Insurance Index -1.5 per cent, Oil and Gas Index -0.6 per cent, Banking Index -0.6 per cent, Industrial Goods Index -0.2 per cent and Consumer Goods Index -0.5 per cent .
Meanwhile, analysts said the release of more results and macro economic data are likely to trigger more buying interests, especially for banking stocks if the numbers beat expectations.
Some of the macroeconomic data, such as Consumer Price Index (CPI), second quarter Gross Domestic Product (GDP), among others, are expected to impact on the direction of the market.
In their observations last weekend, market, analysts at Cordros Capital said: “In line with our expectations, positive sentiments returned to the local bourse during the week under review. We believe earnings from the big banks in the coming week will sustain the positive market sentiments. Particularly, as the declaration of interim dividends will accompany the results.
“Overall, we advise investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings.”
Analysts at InvestData Consulting Limited said: “As investors digest these numbers and sector rotation continue, market players should not panic but trade with caution and build their tent in fundamentally sound stocks with growth prospects.
“This, they can do by keeping their earnings power in the up direction to support their future price. Growth and value stocks should be the attraction at the market arena now, considering the strength of the numbers emanating from the companies and what is happening in the foreign exchange, FX market because some companies are net beneficiaries of this latest Central Bank of Nigeria policy.”
On market outlook, InvestData analysts said: “We expect a mixed trend in the face of cautious trading as investors continue portfolio reshuffling and interpretation of the corporate earnings are ongoing ahead of the July inflation, Q2 GDP and results from interim dividend-paying banks.”