Following market performance in the previous trading weeks, the expectation of mixed sentiments outlook for the equities this week high, OLUSHOLA BELLO writes.
Analysts have anticipated Nigerian stock market dynamics for the new week include a mix of sentiments, profit-taking activities, and the ongoing presence of bargain hunters, all unfolding against the backdrop of expectations for unaudited fourth quarter (Q4) 2023 financial results.
The local stock market has exhibited robust bullish momentum, fueled by heightened buying interest in bellwether stocks and those with strong fundamentals. This remarkable surge was underpinned by continued funds inflow, reflecting portfolio repositioning in response to recent macroeconomic data indicating nearly a three-decade high in consumer price inflation. Despite below-average traded volumes, several tickers reached new 52-week highs.
Analysts Optimism
Analysts at Cowry Assets Management Limited said: “the All-Share Index (ASI) current movement pattern indicates that the market is persistently in the overbought region according to the RSI, with stock valuations and prices significantly exceeding intrinsic values.
“This signals a potential imminent pullback, suggesting the market requires a correction in the short term. Anticipated market dynamics for the upcoming week include a mix of sentiments, profit-taking activities, and the ongoing presence of bargain hunters, all unfolding against the backdrop of expectations for unaudited Q4, 2023 financial results.
“Furthermore, market participants are gearing up for heightened volatility, especially with the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) deferring its January meeting until February 2024.
“Investors will closely monitor these factors for potential shifts in market conditions. Amidst all these, we continue to advise investors to take position in stocks with consistent track records of dividend payments and strong fundamentals and growth prospect to support earnings growth.”
Analysts at Cordros Securities Limited stated that, “in the short term, we expect market performance to be dominated by the bulls, as positioning for 2023 full year earnings releases and accompanying dividends declarations should outweigh profit-taking activities.
“Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro environment remains a significant headwind for corporate earnings.”
Afrinvest Limited said “this week, we expect the positive sentiment to linger albeit at a softer price, moderated by profit-booking. Hence, we advise cautious entry and equity selection based on fundamentals.”
Last Week’s Trading Activities
The Nigerian equities market sustained its bullish momentum for the third consecutive week, as the bourse recorded gains on all trading days.
Strong buy sentiment drove the biggest weekly gains on the domestic bourse in nine years, as bulls pushed the NGX-ASI higher by 13.84 per cent to a record 94,538.12 points. As a result, market capitalisation expanded N6.29 trillion to close the week at N51.735 trillion.
Across the sectoral front, it was largely bullish. The NGX Industrial Goods index recorded the most significant weekly gain of 46.9 per cent. NGX Insurance index followed with a weekly gain of 14.9 per cent, while NGX Oil & Gas and NGX Consumer Goods indices rose by 8.8 per cent and 8.2 per cent W-o-W. The NGX Banking index was the sole loser for the week by 0.1 per cent decline.
The market breadth for the week was positive as 81 equities appreciated in price, 58 equities depreciated in price, while 16 equities remained unchanged. The Initiates Plc led the gainers table by 59.78 per cent to close at N2.94, per share. Dangote Cement followed with a gain of 53.94 per cent to close at N538.80, while Honeywell Flour Mill went up by 50.77 per cent to close to N5.85, per share.
On the other side, Royal Exchange led the decliners table by 22.45 per cent to close at 76 kobo, per share. Ikeja Hotel followed with a loss of 10.57 per cent to close at N7.70, while Linkage Assurance declined by 8.16 per cent to close at N1.35, per share.
Overall, a total turnover of 5.179 billion shares worth N77.797 billion in 79,012 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 5.719 billion shares valued at N88.828 billion that exchanged hands prior week in 80,064 deals.
