Pressure on equities defies earning season, index slumps by 0.69 per cent

Despite improved numbers in 2020 full year result churned out by quoted companies, sentiments remained weak in the equities market, as losses recorded in the shares of most highly capitalised stocks, especially Dangote cement, BUA cement and MTN Nigeria pulled the All Share lndex (ASI) by 0.69 per cent .

At the close of transactions last week, the Nigerian Stock Exchange (NSE) suffered seventh consecutive decline as the ASI and market capitalisation depreciated by 0.69 per cent to close the week at 38,382.39 and N20.082 trillion respectively.

However, all other indices finished higher with the exception of NSE Mainboard, NSE 30, NSE Insurance, NSE Consumer Goods, NSE Lotus II, NSE Industrial and NSE Growth Indices, which declined by 1.68.per cent, 0.99 per cent, 0.01 per cent, 1.46 per cent, 1.51 percent, 2.62 per cent and 0.25 per cent per cent respectively, while the NSE Sovereign Bond Index closed flat.

Analysts said the rising bond yields and TB rates have continued to scare investing public away from the market.

Last week, performance in the Secondary T-bills market liquidity levels remained strong all week to close at ₦602.6 billion despite the auctions.

The Central Bank of Nigeria (CBN) mopped up ₦100 billion via OMO auction following maturities worth ₦143.4 billion. The OMO sale was oversubscribed at 3.5x on average, with the 362-day instrument enjoying the most demand.

Analysts at Afrinvest said the strong demand is expected to be sustained in subsequent auctions due to robust system liquidity and attractive rates to lure FPIs.

On market performance this week, Vetiva research, said: “Given that both the MPC meetings and monthly bond auction are scheduled for next week, we expect the market to open the week on a quiet note, with most players waiting on the side-lines in anticipation of these two events.

“Meanwhile, we expect the OMO market to remain driven by oil prices and developments in the global macro space, while we foresee a quiet opening session, albeit with moderate sell-offs in the NTB space.”

Vertiva Dealing and Brokerage firm said the domestic bourse was characterized by mixed sentiment during the week, as sell pressure persisted on the back of weak economic indicators, while cheap valuations and attractive dividend yields in the Banking space spurred some BUY interest towards the end of the week.

“With the expectation of further uptick in yields on short-dated instruments in the Fixed Income market, we anticipate further pressure in the equity market in the near term.”

A review of market performance last week showed that sell pressures persisted on the NSE as more highly capitalised stocks depreciated in price, resulting to a further slide in market capitalisation by N45 billion.

At the reopening of transactions yesterday, the ASI dipped by 86.84 absolute points, representing a decrease of 0.22 per cent to close at 38,561.84 points while the overall market capitalisation value lost N45 billion to close at N20.176 trillion.

Market loss was driven by price depreciation in large and medium capitalised stocks amongst which are; Nigerian Breweries, Guaranty Trust Bank, Guinness Nigeria, Dangote Sugar Refinery and International Breweries. Renewed appetite in some highly capitalised stocks lifted transactions on the equities sector of the NSE on Tuesday, causing the ASI to appreciate by 0.41 per cent.

Market capitalisation appreciated by N83 billion to close at N20.259 trillion while the ASI grew by 158.97 absolute points, representing an increase of 0.41 per cent to close at 38,720.81.

The upturn was driven by price appreciation in large and medium capitalised stocks such as Dangote Cement, Guinness Nigeria, MTN Nigeria Communications (MTNN), Vita Foam Nigeria and GlaxoSmithKline Consumer Nigeria.

Transactions on the stock market reversed previous gains to close on a downturn on Wednesday, causing market capitalisation to depreciate by N8 billion.

Precisely, the ASI reduced by 14.68 absolute points, representing a decline of 0.04 per cent to close at 38,706.13 points while the overall market capitalisation value lost N8 billion to close at N20.251 trillion.

The downturn was driven by price depreciation in large and medium capitalised stocks amongst which are; Guaranty Trust Bank, Vitafoam Nigeria, NCR Nigeria, Neimeth International Pharmaceuticals and NEM Insurance.

Following gains recorded by bluechip stocks, especially Eternaoil and Lasaco Assurance, the equities market reversed previous losses to close in an upbeat Thursday, causing the All-Share Index (ASI) to increase by 0.54 per cent.

Precisely, market capitalisation gained N109 billion to close at N20.360 trillion while the ASI rose by 208.71 absolute points, representing a growth of 0.54 per cent to close at 38,914.84 points. The upturn was driven by price appreciation in large and medium capitalised stocks amongst which are; Guaranty Trust Bank, Zenith Bank, Dangote Sugar Refinery, Eterna and UAC of Nigeria (UACN).