Improved Q1 earnings lift stock market indices
Improved corporate earnings by tier-one banks in the first quarter of 2021 stimulated activities on the Nigerian Exchange Limited (NGX), last week, with the all-share index (ASI) and market capitalisation appreciating by 1.36 per cent to close the week at 39,834.42 and N20.847 trillion respectively.
All other indices finished higher except NSE CG, NSE Banking, NSE-AFR Bank Value, NSE AFR Div Yield, NSE MERI Value, NSE Consumer Goods, NSE Growth Index and
NSE Sovereign Bond Index, which depreciated by 0.15.per cent, 2.09 per cent, 1.87 per cent, 0.76 per cent, 2.77 per cent, 0.02 per cent
0.46 and 7.09 per cent respectively. The NSE ASeM Index closed flat.
Although the local bourse kicked off the week on a sluggish note, bargain hunting activities in the last trading days lifted market indicators as investors picked blue-chips and dividend-paying stocks.
Analysts expressed optimism that bull dominance would likely increase their positions in light of decent corporate earnings released last week.
However, they also argued that the bears would take advantage of the two-week gains in cashing out given improving yields in the FI market.
The Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion said: “We expect the mixed and positive trend to continue as investors continue reacting positively to impressive Q1 figures in expectation of more earnings reports in the market this period besides the profit-taking, even in the face of rising virus cases across the globe and high yields in fixed income space.
“We also expect continued portfolio realignments on the strength of the earnings performance released so far.” Analysts at Codros Capital said: “We expect mixed market performance in the week ahead as the bulls will likely increase their positions in light of decent corporate earnings released this week.
“On the other hand, the bears will look to take advantage of the two-week gains in cashing out given improving yields in the FI market.
Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings.”
A review of market performance last week showed that gains recorded by most blue-chip stocks, especially Nigerian Breweries (NB) and Fidson lifted transactions on the NGX on Monday, as market capitalisation appreciated by N9 billion.
At the close of trading, the ASI grew by 16.7 absolute points, representing an increase of 0.04 per cent to close at 39,318.52 points while the market capitalisation value gained N9 billion to close at N20.577 trillion.
The market gain was driven by price appreciation in large and medium capitalised stocks such as Nigerian Breweries, Fidson Healthcare, Lafarge Africa, Africa Prudential and Guaranty Trust Bank.
After seven consecutive sessions of capital appreciation, the bears upstaged the bulls at the end of Tuesday’s transactions on NGX, causing the ASI to depreciate by 0.03 per cent.
The ASI dropped by 13.04 absolute points, representing a decline of 0.03 per cent to close at 39,305.48 points while the market capitalisation depreciated by N7 billion to close at N20.57 trillion.
The market loss was driven by price depreciation in large and medium capitalised stocks amongst which are; Guaranty Trust Bank, University Press, Zenith Bank, Sterling Bank and Honeywell Flour Mill.
The bears maintained dominance on the equities market on Wednesday, as more blue-chip stocks depreciated, resulting in a further decline in market capitalisation by N274 billion.
At the close of trading, the ASI dropped by 524 absolute points, representing a decline of 1.33 per cent to close at 38,781.48 points while the overall market capitalisation value lost N274 billion to close at N20.296 trillion.
The downturn was driven by price depreciation in large and medium capitalised stocks amongst which are Guinness Nigeria, International Breweries, Ardova Plc, PZ Cussons Nigeria and UAC of Nigeria (UACN).
Following gains recorded by most highly capitalised (highcap) stocks, transactions on the NGX reversed negative sentiments to close in an upbeat on Thursday, as market capitalisation appreciated by N356 billion.
At the close of trading on Thursday, the ASI gained 679.72 absolute points, representing a growth of 1.75 per cent to close at 39,461.20 points. Similarly, the overall market capitalisation value rose by N356 billion to close at N20.652 trillion.
The uptrend was driven by price appreciation in medium and large capitalised stocks amongst which are; Dangote Cement, MTN Nigeria Communication (MTNN), Okomu Oil, Julius Berger and Ekocorp Plc
Last week, a turnover of 1.441 billion shares worth N10.883 billion was recorded in 19,614 deals by investors in contrast to a total of 1.602 billion shares valued at N42.142 billion that was exchanged in 19,507 deals in the preceding week.
The financial services industry (measured by volume) led the activity chart with 970.56 million shares valued at N6.779 billion traded in 10,876 deals; thus contributing 67.36 per cent to the total equity turnover volume.
The conglomerate industry followed with 234.966 million shares worth N387.565 million in 1,320 deals. The third place was the consumer goods industry, with a turnover of 61.614 million shares worth N974.254 million in 2,818 deals.
Trading in the top three equities namely FBN Holdings Plc, Transnational Corporation of Nigeria Plc and Access Bank Plc (measured by volume) accounted for 603.939 million shares worth N2.963 billion in 3,618 deals, contributing 41.91 per cent to the total equity turnover.
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