High-cap stocks, anticipation of dividends push NSE index by 1.41%

Demand for undervalued high capital stocks, and anticipations of dividends payment by some quoted companies propelled five consecutive days of rally at the equities sector of the Nigerian Stock Exchange (NSE), causing investors’ fortunes to rise, and the NSE All-share index and market capitalisation to appreciate by 1.41 per cent to close the week at 25,041.89 and N13.063 trillion, respectively.

Similarly, all other indices finished higher with the exception of NSE Insurance Index, which depreciated by 0.28 per cent, while the NSE ASeM closed flat.

Analysts at the weekend, expressed missed feelings on the sustainability of the bulls’ run due to inconsistent government policies, which have continued to dampen confidence.
According to them, this is likely to support volatility with the earnings reporting season gradually coming to end.

For instance, the Chief Research Office of Investdata Consulting Limited, Ambrose Omordion, said: “The market again seems to have discounted the policy somersaults and lack of economic direction, as the government and its economic managers continue to wobble on policy formulations and statements that reveal a clear lack of coordination and vision among the different facets of policymaking.

“One of the major drivers of inflation in the country today is the pump price of fuel, which in the last four months have been adjusted up and down before the latest price of N150 per litre of premium motor spirit, the highest in the history of Nigeria.”

He continued: “It is painful that the current administration has failed to fix the nation’s oil refineries in Warri, Port-Harcourt, and Kaduna, which could have helped stabilise the price of fuel, rather than spending billions of scarce foreign exchange on importation of the prime product, resulting in imported inflation.

“The removal of fuel subsidy according to the government was to stem the spate of high-level corruption and achieve single exchange rate and expansion of tax, but they are yet to give a direction and indicate where we are going as nation, due to the lack of focus and coordination to chart a new course in this economic reset.”

He therefore advised investors to trade low priced stocks with serious caution to avoid being trapped.

Also, analysts at Cordros capital, said: “Our view continues to favour cautious trading as risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions. Thus, we continue to advise investors to seek trading opportunities in only fundamentally justified stocks.”

A review of the market performance last week revealed renewed bargain-hunting in most blue-chip stocks, especially Flour Mills and GlaxoSmithkline (GSK) Consumer Nigeria, the equities market commenced trading for the week on a positive note on Monday, as the All Share Index (ASI) appreciated by 0.29 per cent.

Specifically, at the close of trading Monday, the ASI increased by 72.39 absolute points or 0.29 per cent to close at 24,766.12 points. Similarly, the market capitalisation rose by N37 billion to close at N12.919 trillion.

The uptrend was impacted by gains recorded in large and medium capital stocks, including Flour Mills of Nigeria, BUA Cement, GSK Consumer Nigeria, Guaranty Trust Bank, and Neimeth International Pharmaceuticals.

Transactions at the Exchange sustained a rising profile Tuesday, as more blue-chip stocks appreciated in price, resulting in a further increase in market capitalisation by N40 billion.

Specifically, at the close of transactions Tuesday, the All -Share Index (ASI), added 75.82 absolute points, a 0.31 per cent rise to close at 24,841.94 points. Similarly, investors gained N40 billion as market capitalisation increased to N13.959 trillion.

The upturn was impacted by gains recorded in medium and large value stocks, including Seplat, Nigerian Breweries, Flour Mills of Nigeria, Zenith Bank, and UAC of Nigeria (UACN).

On Wednesday, the local bourse extended the positive streak to four consecutive trading days, just as more blue-chip stocks witnessed price rallies, resulting to a further increase in the All-Share Index (ASI) by 0.16 per cent

Specifically, at the close of transactions on Wednesday, the ASI increased by 40.10 absolute points or 0.16 per cent rise to close at 24,882.04 points. Similarly, the overall market capitalisation gained N21 billion to close at N12.980 trillion.

The uptrend was impacted by gains recorded in large and medium capital stocks, including 11 Plc, Stanbic IBTC Holdings, Chemical and Allied Products (CAP), Presco, and Guaranty Trust Bank.

Analysts at Afrinvest Limited, said: “For the rest of the week, we expect market performance to move in tandem with the trend in earnings releases.”

Trading on the Exchange sustained a rising profile on Thursday, as more blue chip stocks appreciated in price, causing investors’ wealth to increase by N25 billion

The All-Share Index (ASI) increased by 48.30 absolute points, representing a growth of 0.19 per cent to close at 24,930.34 points. Similarly, the overall market capitalisation size gained N25 billion to close at N13.005 trillion.

The upsurge was impacted by gains recorded in large and medium capital stocks, including Seplat Petroleum Development Company (Seplat), Stanbic IBTC Holdings, Guinness Nigeria, MTN Nigeria Communications, and NASCON Allied Industries (NASCON).

Capital market analysts noted that the domestic equities market sustained its bullish streak for the fifth consecutive session, following continued interest in banking stocks.

Further breakdown of last week’s trading showed that a turnover of 1.065 billion shares worth N10.798 billion was recorded in 20,482 deals by investors on the floor of the Exchange, in contrast to a total of 421.984 million shares valued at N5.337 billion that exchanged in 11,801 deals during the preceding week.

The financial services industry (measured by volume) led the activity chart with 677.301 million shares valued at N5.070 billion traded in 10,386 deals; thus contributing 63.59 per cent the total equity turnover.

The conglomerates industry followed with 153.384 million shares worth N580.216 million in 894 deals.

The third place was the Industrial Goods industry, with a turnover of 57.404 million shares at N861.263 million in 1,671 deals.

Trading in top three equities namely, FBN Holdings Plc, UACN Plc, and Access Bank Plc (measured by volume) accounted for 320.196 million shares worth N1.802 billion in 2,639 deals, contributing 30.06 per cent to the total equity turnover volume and value respectively.

A total of 118,062 units valued at N1.061 billion were traded in 26 deals last week, compared with 34,880 units worth N44.775 million transacted in 22 deals during the preceding week.

A total of 56,530 units of bonds valued at N58.664 million were traded last week in 15 deals compared with 11,909 units worth N15.732 million transacted during the preceding week in eight deals.

Forty-one equities appreciated in price during the week, higher than 24 equities in the previous week. Also 18 equities depreciated in price, lower than 28 equities during the period, while 104 equities remained unchanged, lower than 111 equities recorded in the previous week.

Source: Punchng, August 10, 2020