Investors reposition ahead of half-year earnings

Renewed bargain-hunting ahead of the half-year earnings season spurred activities on the equities sector of the Nigerian Exchange Limited (NGX), last week, as investors have begun to take a position in undervalued stocks.

With the bulls dominating in four of the five trading days, the all-share index (ASI) and market capitalisation appreciated by 1.23 per cent to close the week at 38,726.1 points and N20.185 trillion respectively.

Also, all other indices finished higher except NSE Consumer Goods, NSE Oil/Gas and NSE Sovereign Bond, which depreciated by 0.37 per cent, 0.79 per cent and 0.74 per cent respectively.

The volume of shares traded increased as a turnover of 1.082 billion shares worth N9.548 billion was recorded in 17,933 deals by investors on the floor of the exchange.

This volume of shares traded is however higher than a total of 1.037 billion shares valued at N9.471 billion that changed hands last week in 17,577 deals during the preceding week.

Reacting to market performance, the Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion, urged investors to change their perception and trading strategies and stay ahead of the trends to enhance their investment returns and capital appreciation through in-depth knowledge of the market.

“Traders must, therefore, focus on value areas, using technical tools to identify resistance and support levels of any position-taking at this point.

“Investors should target blue-chip stocks with the prospect to maintain an uptrend in their earnings as events continue to unfold in the economy with expectations that there would be positive policy or statement from the government capable of turning things around for good.

“We also expect the ongoing vaccination to support a global and domestic economic recovery that will support the market and give direction,” he said.

Analysts at Codros Capital said: “The week ahead, we expect alpha-seeking investors to continue rotating their portfolio towards equities amid moderation in the uptick of yields in the FI market.

“We expect market performance to be dominated by the bulls, as positioning by early birds in dividend-paying stocks ahead of Half Year (H1).2021 dividend declarations should outweigh profit-taking activities.