Profit-taking takes toll on NGX turnover
After several weeks of a sustained rally, sell-offs and profit taking across major sectors dragged the Nigerian Exchange Limited (NGX) All-Share Index (ASI) and market capitalisation by 0.06 per cent to close last week at 42,014.50 and N21.926 trillion.
Similarly, all other indices finished lower except NGX Main Board, NGX Insurance, NGX MERI Growth, NGX Lotus II and NGX Industrial Goods indices which appreciated by 0.32.per cent, 0.99 per cent, 0.09.per cent, 0.15 per cent and 0.88 per cent respectively, while the NGX ASeM Index closed flat.
Last week, the local bourse could not consolidate the gains recorded in the prior week as investors took advantage of the gains recorded over the past month in booking profit on bellwether stocks.
However, analysts argued that the possibility of a rebound is high, considering the improved performance recorded by a good number of the listed firms in their third quarter (Q3) scorecards.
The Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion affirmed that the level of improvement in earnings, coupled with the interim corporate actions, and liquidity in the equity space will determine the extent of the market rally when it rebounds from the current pullback.
He also identified activities in the global market such as inflation and oil prices, which are currently around $84 per barrel as factors that would determine the extent of a market rebound this week.
“We expect the mixed trend to continue as price corrections create buy opportunities into value stocks on the strength of their strong Q3 earnings power
“Also, many stocks are trading within their buy ranges, a situation expected to attract more funds into the equity space, given the dividend Yield capable of serving as a hedge against inflation.”
Analysts at Cordros Capital said they expect investors to rebalance their portfolios based on an assessment of corporate earnings for Q3-21.
The analysts predicted a mixed market performance this week as investors rotate their portfolios towards dividend-paying stocks amid intermittent profit-taking activities.
They urged investors to take positions in only blue-chip stocks as the weak macro scenario remains a significant headwind for corporate earnings.
Further breakdown of last week’s transactions showed that a turnover of 1.428 billion shares worth N12.4 billion was recorded in 23,987 deals by investors on the floor of the exchange, down from a total of 3.001 billion units valued at N34.547 billion that changed hands in 25,932 deals during the preceding week.
The financial services industry (measured by volume) led the activity chart with 1.01 billion shares valued at N7.9 billion traded in 12,208 deals, thus contributing 70.75 per cent to the total equity turnover.
The conglomerate industry followed with 94.729 million shares worth N207.829 million in 878 deals. The consumer goods industry ranked third with a turnover of 62.779 million shares worth N1.326 billion in 3,814 deals.
Trading in the top three equities namely FBN Holdings (FBN H) Plc, Sterling Bank Plc and United Bank for Africa (UBA) Plc (measured by volume) accounted for 402.924 million shares worth N3.1 billion in 3,208 deals, contributing 28.22 per cent to the total equity turnover volume.
A total of 252,857 units of Exchange Traded Products (ETPs) valued at N3.8 million were traded in 31 deals compared with a total of 186,360 units valued at N3.2 million that was transacted during the preceding week in 16 deals.
Also, 32,626 units of bonds, valued at N33.332 million were traded in 16 deals compared with a total of 47,577 units valued at N50.35 million transacted during the preceding week in 32 deals.