By Peter Egwuatu
Following the marginal gain of N5 billion recorded last week in the equities market, analysts have projected the prevalence of profit taking this week amid mixed sentiments by investors.
Consequently, analysts urged investors to trade cautiously and seek for equities that have sound fundamentals as they wait for companies to release their 2019 full year results.
They also noted that the decision on Friday by the Monetary Policy Committee, MPC, of the Central Bank of Nigeria, CBN, to retain the Monetary Policy Rate (MPR) at the same level may further stimulate the market and boost further rally this week.
Reacting, analysts at Cordros Securities Limited said: “Looking ahead, while we expect profit-taking to continue in the coming week, we still see significant legroom for a further rally as the elevated maturities from fixed income instruments hunt for investment vehicles. Nonetheless, we advise investors to cherry-pick fundamentally sound stocks.”
In its own comments, analyst and Chief Operating Officer, InvestData Limited, Mr Ambrose Omoriodon said: “ The CBN’s monetary policy decision to stimulate the economy is yielding the desired result, except for the inflation rate partly influenced by continued border closure and increased demand for goods and services during the yuletide. With more companies notifying the Nigerian Stock Exchange, NSE of their closed period and board meeting dates to approve the 2019 full year financials, discerning investors are also taking the opportunities offered by the recent pullbacks to accumulate positions ahead of the earnings season expected to begin any moment from February.
“Regardless of the mixed economic outlook, however, many stocks are set to soar into the earnings reporting season as market reaction to the fourth quarter 2019 economic recovery is expected to impact positively on corporate score cards.”
Commenting as well, analysts at Vetiva Capital Research said: “With some significant gains witnessed in the Industrial Goods sector, as well as some mild profit taking in other sectors such as Banking and Consumer Goods, the bounce seen earlier in the market appears to have lost some momentum. Thus, we expect a mixed start to this week’s trading, amidst lukewarm investor sentiment.”
Meanwhile, sentiments were mixed on the domestic bourse last week as Cement sub-sector driven gains were offset by selloffs across the equities of companies in the Consumer Goods and Banking sectors. Consequently, the NSE All Share Index, ASI closed marginally higher (0.03 percent) for the week, with the Year-to-Date, Yt D return settling slightly higher at 10.4 percent while market capitalization appreciated by 0.03 percent or N5 billion to close last week at N15.261 trillion from N15.256 trillion penultimate week.
Analysing performances by sectors, the Industrial Goods index led gains, with 5.1 percent, following investors’ interest in Dangote Cement (2.8 percent), BUA Cement (2.80 percent) and WAPCO (10.8 percent). Similarly, gains were recorded in the Insurance (3.0 percent) and Oil & Gas (2.5 percent) sectors.
However, the Consumer Goods (-3.6 percent) and Banking (-2.6 percnt) sectors recorded losses, following selloffs of Nestle Nigeria (-6.1 percent) and Guaranty Trust Bank (-4.2 percent).“ A total turnover of 1.237 billion shares worth N22.762 billion in 21,156 deals were traded last week by investors on the floor of the Exchange, in contrast to a total of 2.087 billion shares valued at N26.470 billion that exchanged hands penultimate week in 24,262 deals.
The Financial Services industry (measured by volume) led the activity chart with 837.345 million shares valued at N10.511 billion traded in 12,041 deals; thus contributing 67.69 percent and 46.17 percent to the total equity turnover volume and value respectively. The Industrial Goods followed with 154.540 million shares worth N2.998 billion in 2,862 deals. The third place was ICT industry, with a turnover of 52.709 million shares worth N1.262 billion in 709 deals.
Trading in the top three equities namely, Access Bank Plc, Zenith Bank Plc and Guaranty Trust Bank Plc. (measured by volume) accounted for 421.765 million shares worth N8.769 billion in 5,886 deals, contributing 34.10 percent and 38.52 percent to the total equity turnover volume and value respectively.
Thirty-two (32) equities appreciated in price during the week under review, higher than twenty-one (21) equities in the penultimate week. Twenty-eight (28) equities depreciated in price, lower than forty-two (42) equities in the previous week, while one hundred and three (103) equities remained unchanged, higher than one hundred (100) equities recorded in the penultimate week.