•Investment analysts in divergent views

By Peter Egwuatu

Mixed sentiments characterisednthe stock market last week with profit-taking bringing down market capitalisation while trade volume and value went up.

These came at the backdrop of the retention of Monetary Policy Rate, MPR, at 11.5 per cent by the Central Bank of Nigeria, CBN’s Monetary Policy Committee, MPC.

READ ALSO: MPR, HI’21 earnings to influence stock market sentiment this week

Analysts also said that concerns over developments in the Foreign Exchange market, FX may have impacted investors’ behaviour. The apex bank had shut out Bureau de Change operators from its FX window, a development which the analysts believe could throw up adverse unintended consequences on businesses that rely on FX for operations.

But the inflow of corporate results appears to have moderated the negative sentiments.

The analysts also project that the developments in the macroeconomic landscape and corporate actions will shape the direction of the local bourse this week.

The anticipated depreciation in the nation’s currency has triggered panic in the market and economy at large, as expected.

Consequently, the Nigerian Exchange Limited, NGX, recorded losses in three of the five trading sessions last week.

Notably, profit taking in BUA Cement led to a loss by 4.2 per cent  followed by Guaranty Trust Bank which declined by 3.7 per cent and Zenith Bank plummeted by 1.2 per cent to drive the weekly loss.

As a result these, the All-Share Index shed 0.3 per cent Week-on-Week, W-o-W to close at 38,547.08 points. Accordingly, the Month-to-Date, MtD, return moderated to 1.7 per cent, while the Year-to-Date, YtD, loss increased to -4.3 per cent. Specifically, Market capitalisation lost N62.9 billion in value to close at N20.1trillion.

Activity levels were stronger than the prior week, as trading volume and value rose significantly by 53.8 per cent and 125.8 percent W-o-W respectively.

Sectoral performance was broadly negative following declines in the Industrial Goods which dropped by 1.3 per cent, Insurance 1.1 per cent and Banking 0.9 per cent, while there were gains in the Oil and Gas Index by 3.8 per cent and Consumer Goods Index 0.1 per cent.

Analysts at Cordros Capital said: “We believe investors will digest the flurry of earnings released last week to gauge the extent of improvement in company’s fundamentals given the tepid recovery in macroeconomic conditions. As a result, we expect portfolio rebalancing activities into cyclical stocks and positioning in dividend-paying stocks to shape market performance in the week ahead. With the MPC meeting out of the way, we believe developments in the macroeconomic landscape and corporate actions will shape the direction of the local bourse.”

Reacting to the development in the market, analysts at InvestData Consulting Limited said: “Companies that have their source of raw material within, and those that have less imported material in their production process are likely to sustain their positive performance in the face of the impending Naira devaluation in the back market.

“We expect a mixed trend as influx of earnings continues on Friday, the last filing date for quarterly earnings reports of companies with December and March year-ends, just as investors also continue to study emerging numbers so far and development in the FX market, while more earnings reports hit the market.”

Commenting as well, analysts at Afrinvest Securities Limited said: “In the coming week, we expect bargain hunting activities to dominate on the back of relative price attractiveness of stocks and release of favourable H1’21 earnings results.”