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Bargain hunting in bellwethers lifts index by 1.37% first time during pandemic

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Analysts predict gloomy outlook despite improved performance
Urges investors to increase stake in blue chips

After two months of decline induced globally by the ongoing Coronavirus pandemic, improved buying interest driven by bargain hunting in bellwether stocks last week lifted transactions on the equities sector of the Nigerian Stock Exchange (NSE).

Consequently, the All-share index and market capitalisation appreciated by 1.37 per cent to close the week at 21,384.03 and N11.144 trillion respectively.

All other indices finished higher with the exception of NSE Oil/Gas, NSE Lotus II and NSE Industrial Goods which depreciated by 4.76 per cent , 2.65 per cent and 6.59 per cent while NSE ASeM Index closed flat.

The Coronavirus induced downturn at the peak of earnings reporting season has left many stocks attractive, following which they now offer high dividend yields.

With stock prices hitting new 52-week, as well as between five and 11-year lows, discerning investors are taking advantage of the prevailing low prices to accumulate fundamentally sound stocks.

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A breakdown down of last weeks transactions showed that the Nigerian equities market reopened on a downturn on monday with N222 billion decline in market capitalisation.

Specificalky, the All Share Index fell by 425.24 points or 2.02 per cent to 20,669.38 points. Accordingly, investors lost N222 billion in value as market capitalisation declined to N10.772 trillion.

The downturn was impacted by losses recorded in medium and large capitalised stocks, amongst which are; Seplat Petroleum Development Company (Seplat), Dangote Cement, BUA Cement, BOC Gases Nigeria and Nigerian Aviation Handling Company (NAHCO).

However, equities rebounded on Tuesday, following price gains recorded by most bluechip stocks, causing market capitalisation to appreciate by N133 billion.

Precisely, the ASI rose by 255.81 points or 1.24 per cent to 20,925.19 points. Also, investors gained N133 billion in value as market capitalisation went up to N10.905 trillion.

The upturn was impacted by gains recorded in medium and large capitalised stocks, amongst which are; MTN Nigeria, Lafarge Africa, Zenith Bank, Custodian Investment and United Bank for Africa (UBA).

At the close of trading on Wednesday, equities sustained positive trend as the capitalisation rose by N77 billion amid renewed bullish activity in high capitalised stocks.

The All Share Index (ASI) increased by 148.07 absolute points, representing a decline of 0.71 per cent to close at 21,073.26 points. Similarly, the market capitalisation rose by N77 billion to close at N10.982 trillion.

The uptrend was impacted by gains recorded in large and medium capitalised stocks, amongst which are; Lafarge Africa, Dangote Sugar Refinery, Stanbic IBTC Holdings, Flour Mills Of Nigeria, Ecobank Transnational Incorporated (ETI).

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Analysts at Afrinvest Limited said that “We do not expect to see a sustained bullish run although investors have continued to seek bargain hunting opportunities.”

Market breadth closed positive, with 25 gainers versus eight losers. ETI and Ikeja Hotel recorded the highest price gain of 10 per cent each, to close at N4.40 and 99 kobo, respectively, while Wema Bank followed with a gain 9.80 per cent to close at 56 kobo, per share.

Lafarge Africa went up by 9.77 per cent to close at N11.80, while Dangote Sugar Refinery appreciated by 9.55 per cent to close at N9.75, per share.

On the other hand, union Diagnostic and Clinical services and Skyway Aviation Handling Company led the losers’ chart by 10 per cent each, to close at 27 kobo and N2.16, respectively, while Ardova Plc followed with a decline of 9.64 per cent to close at N11.25, per share.

GlaxoSmithKline Consumer Nigeria lost 9.38 per cent to close at N4.35, while Courteville Business Solutions shed 9.09 per cent each to close at 20 kobo, per share.

Similarly, transactions sustained rising profile on thursday, as more bluechip stocks joined the league of gainers, resulting to a further rise in the All Share Index (ASI) by 1.47 per cent.

Specifically, at the closed of transactions yesterday, the ASI increased by 310.77 absolute points, representing a growth of 1.47 per cent to close at 21,384.03 points. Similarly, the market capitalisation gained N162 billion to close at N11.144 trillion.

The upturn was impacted by gains recorded in medium and large capitalised stocks, amongst which are; Nestle Nigeria, Seplat Petroleum Development Company (Seplat), Stanbic IBTC Holdings, Dangote Sugar Refinery and Lafarge Africa. Analysts argued that high dividend yields continue to attract buying interests, while more audited corporate earnings hit the market going forward.

This is despite the likely continuation of the selloffs, with investors buying to increase their positions in undervalued stocks ahead of dividend declaration.

The chief research officer of Investdata Consulting Limited, Ambrose Omordion said: ” Investors and traders are positioning in anticipation of the 2019 full-year earnings reports, amidst the changing sentiments in the hope of improved liquidity and positive economic indices which may reverse the current trend.

“We see investors focusing on the upcoming full-year earnings season, targeting companies with strong potential to grow their dividend on the strength of their earnings capacity.”

Codros Capital Limited said: “Despite the market closing positive this week, risks remain on the horizon, given the rising cases of COVID-19 in Nigeria.

“More so, our base case is for the FGN to extend the presently instituted lockdown in Lagos, Abuja, and Ogun, by another one week. Thus, we advise investors to trade cautiously, taking positions in fundamentally justified stocks.”

Further analysis of lastweek’s trading showed that the market opened for four trading days as the Federal Government declared Friday 10th April 2020 as public holiday to mark Good Friday celebration.

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A turnover of 2.440 billion shares worth N19.932 billion in 18,918 deals were recorded by investors, in contrast to a total of 1.534 billion units valued at N11.267 billion that was exchanged in 18,928 deals during the preceding week.

The financial services industry (measured by volume) led the activity chart with 2.182 billion shares valued at N11.107 billion traded in 11,322 deals; thus contributing 89.42 per cent to the total equity turnover volume.

The Industrial Goods followed with 102.769 million shares worth N3.633 billion in 2,483 deals. The Consumer Goods industry ranked third with a turnover of 51.075 million shares worth N3.578 billion in 1,924 deals.

Trading in the top three equities namely, Omoluabi Mortgage Bank Plc, Guaranty Trust Bank Plc and FBN Holdings Plc. (measured by volume) accounted for 1.702 billion shares worth N8.033 billion in 4,443 deals, contributing 69.76% per cent to the total equity turnover volume.

A total of 3.027 million units valued at N13.034 million were traded this week in 23 deals, compared with a total of 6,759 units valued at N61,035.98 transacted last week in 19 deals.

35 equities appreciated in price during the week, higher than 15 equities in the previous week. 18 equities depreciated in price, lower than 36 equities in the previous week, while 110 equities remained unchanged, lower than 112 equities recorded in the preceding week

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