Index inches up amid bargain-hunting ahead as Q1 results near
Anticipation of improved first quarter (Q1) earnings triggered bargain hunting in the equities sector of the Nigerian Exchange Limited (NGX), last week, as the All-share index and market capitalisation appreciated by two per cent to close the week at 48,459.65 and N26.125 trillion respectively.
Similarly, all other indices finished higher except NGX Insurance, which depreciated at 0.05 per cent while NGX Asem, NGX Afr. bank value and NGXGrowth indices closed flat.
Analysts linked the performance to bargain hunters’ positioning for blue-chip companies as profit-taking slows down amidst rekindled buying interests ahead of more scorecards.
According to them, despite the mixed trend so far in 2021, occasioned by the nation’s insecurity and other macroeconomic challenges, coupled with the usual Easter break, April witnessed sustained bulls’ dominance, making the stocks retain value.
Specifically, the Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion said: “We expect buyers to remain in charge and support uptrend, on the expectation of more Q1 2022 earnings reports. This is expected to support positive momentum during this earnings season, amidst oscillating oil prices.
“This is just as the market continues to interpret economic data in relationship with the crude oil price and other factors, amid profit-taking and portfolio rebalancing. This will result in market players targeting sound and dividend-paying stocks in the hope of dividend announcements.”
However, he urged investors to watch the current market trends, especially with bargain hunters still in the market cherry-picking dividend paying stocks.
Codros Capital said: “In the week ahead, we expect the NGX’s floor to be flooded with results as the Q1-22 earnings season commences in full swing.
“Thus, the local bourse is likely to close positive next week as we expect decent earnings releases across the board to temper selling activities by investors reluctant to leave gains in the market. Notwithstanding, we reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings.”
Meanwhile, a turnover of 1.3 billion shares worth N17.8 billion was recorded in 20,212 deals by investors on the floor of the exchange, in contrast to a total of 1.247 billion units valued at N22.4 billion that changed hands in 23,406 deals during the preceding week.
The financial services industry (measured by volume) led the activity chart with 836.8 million shares valued at N6 billion traded in 9,527 deals; thus contributing 64.28 per cent to the total equity turnover volume.
The oil and gas industry followed with 86.9 million shares worth N1.2 billion in 1,770 deals. The third place was the consumer goods industry, with a turnover of 86.286 million shares worth N2.2 billion in 3,056 deals.
Trading in the top three equities namely Fidelity Bank Plc, Zenith Bank Plc and Universal Insurance Plc (measured by volume) accounted for 279.5 million shares worth N2.6 billion in 2,504 deals, contributing 21.47 per cent to the total equity turnover.
Also, 62,425 units of bonds, valued at N66.802 million were traded in 14 deals compared with a total of 245,278 units valued at N253.116 million transacted during the preceding week in 18 deals.
On the price movement chart, 50 equities appreciated during the week, lower than 51 equities while 29 equities depreciated, higher than 18 equities in the previous week.