The Nigerian Exchange Limited (NGX) equities market last week sustained its bullish sentiment amid sustained investors’ interest in banking shares.
Hence, given the bullish sentiment in the equities space, the NGX All-Share Index (ASI) rose week-on-week (W-o-W) by 1.61 per cent to close at 40,868.36 points. Similarly, market capitalisation rose N340 billion W-o-W to close at N21.296 trillion.
The rally in the above-mentioned stocks could be linked to the announcement of Airtel Africa’s intention to buy out minority stake in Airtel Nigeria; a development that could help boost FBN Holding’s plan to divest from Airtel Nigeria.
Sectoral performance was largely positive. The NSE Banking, NSE Oil & Gas and the NSE Industrial indexes rose by 4.53 pe cent, 0.24 per cent and 0.11 per cent respectively to close at 387.64 points, 368.16 points and 2,091.63 points respectively.
On the flip side, the NSE Consumer Goods and NSE Insurance index fell by 0.51 per cent and 1.51 per cent to 564.30 points and 170.43 points respectively.
Market breadth for the week was positive as 42 equities appreciated in price, 26 equities depreciated in price, while 87 equities remained unchanged.
University Press led the gainers table by 28.46 per cent to close at N1.58, per share. FBN Holdings (FBNH) followed with a gain of 21.74 per cent to close at N9.80, while Courteville Business Solutions went up by 21.74 per cent to close to N9.80, per share.
On the other side, Cornerstone Insurance led the decliners table by 12.07 per cent to close at 51 kobo, per share. Morison Industries followed with a loss of 10 per cent to close at N1.89 and BOC Gases declined by 9.87 per cent to close at N10.50, per share.
Overall, a total turnover of 2.179 billion shares worth N21.963 billion in 22,438 deals were traded last week by investors on the floor of the Exchange, in contrast to a total of 2.187 billion shares valued at N16.183 billion that exchanged hands previous week in 14,377 deals.
The Financial Services Industry, measured by volume led the activity chart with 1.770 billion shares valued at N18.058 billion traded in 12,942 deals; contributing 81.20 per cent and 82.22 per cent to the total equity turnover volume and value respectively.
The Conglomerates followed with 93.178 million shares worth N169.819 million in 736 deals, while ICT Industry traded a turnover of 72.338 million shares worth N1.043 billion in 861 deals.
Trading in the top three equities; FBN Holdings, Universal Insurance and Fidelity Bank accounted for 1.161 billion shares worth N12.338 billion in 3,460 deals, contributing 53.28 per cent and 56.18 per cent to the total equity turnover volume and value respectively.
Meanwhile, the equities market is expected to sustain the last week positive performance on the back of improved market sentiment.
Analysts at Cowry Assets Management Limited stated “In the new week, we expect the equities market index to close in positive territory as investors continue to take position ahead of companies’ nine months financial results releases.”
Analyzing the market, the chief operating officer of InvestData Consulting Limited, Mr Ambrose Omordion said that the bull rally last week on the stock market, ahead of Q3 earnings releases, last quarter seasonality, and year-end trading patterns and sentiments.
According to him, the market uptrend persisted after forming an inverted head and shoulder bullish chart pattern on a weekly and daily time frame, despite the seeming divergence in daily traded volume as revealed in the chart above. The increasing buying interest across the sectors signaled a gradual return of investors’ confidence as funds flowed into equity assets with investors hedging against inflation, regardless of the decline recorded in the last five months.
“Trading metrics or statistics in the first week of October has been positive and exciting for the investors at a time oil price remains above $80 per barrel. Also, the federal government presented its Appropriation Bill for 2022 indicating plans to spend N16.4 trillion for the year in the face of the nation external reserve hitting a 21-month high to help resolve the lingering crises in the foreign exchange market which are already threatening the economic recovery if not addressed quickly by the nation’s economic management team.”
He noted further that the huge volume traded last week was boosted by off-market transaction of 473 million in FBN Holdings’ share, an indication of renewed investor confidence in the company, as the stock still remains undervalued, sayng that “The market is currently heading to breakout another resistance level of 40,884.19 bps and 41,014.22 bps, following which we should expect a slight pullback on profit-taking this week before the Q3 numbers starting hitting the market.
“The state of the expected earnings reports and level of liquidity in the equity space will determine the possibility of another rally in the new month and quarter. The two and three-year savings bond rates of 6.9 per cent and 7.9 per cent respectively should not threaten the equity market for now, until we see anything to the contrary. The money flow index read 79.91 points, indicating the entrance of funds into the equity space.
“Investors should hold onto their high value and growth stock positions, even as the direction in the fixed income market yields and rates is still not clear, this is not unexpected as funds flow to where there are higher returns.”
However, Cordros Capital Limited said, “We do not expect the bulls to repeat the flawless victory that pervaded the local bourse this week as the bears are likely to book profit across most counters. Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings.”