Volatility persists on NSE as profit-taking in high cap stocks drag index by 2.57%

Contrary to the significant buying activities witnessed in the previous weeks, the local market was largely dominated by the bears during the week, as profit-taking action in major highly capitalised stocks dragged the All-Share Index and market capitalisation by 2.57 per cent to close the week at N34,136.82 and N17.838 trillion respectively.

Similarly, all other indices finished lower with the exception of the Nigerian Stock Exchange (NSE) Insurance Index, which appreciated by 0.51per cent while the NSE ASeM Index closed flat.

Last week, the market depreciated in four of the five trading sessions of the week. Analysts attributed the downward trend to profit-taking as investors leveraged the capital appreciation within the period to recoup their investment.

Analysts at Codros Capital said: “In the short to medium term, we still see scope for expansion in valuation multiples as the depressed yield environment remains compelling for yield-seeking investors to rebalance their portfolio towards equities.

“In the week ahead, we expect a mixed market performance due to continued profit-taking activities and positioning by early birds in dividend-paying stocks ahead of FY 2020 dividend declarations. We reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings.”

Similarly, analysts at Vertiva Capital Management Limited, said: “We expect a bit of stability in the coming week as investors continue to take position in attractive counters while taking profit in others.”

Investdata Consulting Limited also said: “We expect a mixed market, as players react to banks’ earnings, which came below expectation in the midst of positive news of the November PMI to 50.2 points from 49.6 points in October after six months of contraction according to CBN reports.

“All eyes are on next week’s MPC meeting outcome, just as technical indicators reveal overbought on a weekly and daily chart, while RSI read 70 points and above, a situation that supports correction.

“However, the strong and faster recovery may continue, depending on market forces going forward. This will depend on the quality of Q3 score-cards presented, especially by the tier-1 banks, even as analyses of numbers released so far have helped repositioning investors’ portfolios on the strength of sector and company.”

Further analysis of last week’s transactions showed that a turnover of 11.400 billion shares worth N35.892 billion was recorded in 39,265 deals by investors on the floor of the exchange, in contrast to a total of 4.509 billion units valued at N58.733 billion that was exchanged in 47,140 deals during the preceding week.

The construction/real estate industry (measured by volume) led the activity chart with 8.529billion shares valued at N6.055 billion traded in 438 deals; thus contributing 74.82 per cent to the total equity turnover volume and value respectively.

The financial services industry followed with 1.991 billion shares valued at N19.933 billion in 21,725 deals.

The third place was the conglomerate’s Industry, with a turnover of 423.702 million shares worth N526.698 million in 1,962 deals.

Trading in the top three equities namely, UAC- Property Development Company Plc, Transnational Corporation of Nigeria Plc, and Jaiz Bank Plc (measured by volume) accounted for 9.259 billion shares worth N6.639 billion in 1,958 deals, contributing 81.22 per cent to the total equity turnover.

A total of 21,455 units of ETF, valued at N174.674 million were traded last week in 15 deals compared with a total of 986,941units valued at N4.685 billion transacted in 62 deals during the preceding week.

Also, 11,014 units of bonds valued at N15.257 million were traded in 15 deals compared with a total of 13,332 units valued at N17.142 million that changed hands in 19 deals during the preceding week.

About 21 equities appreciated at price during the week, lower than 69 equities in the previous week. Also, 55 equities experienced price depreciation higher than 12 equities in the previous week, while 85 equities remained unchanged more than 80 recorded in the previous week.