Impressive 2023 Earnings, N1.12trn Gains In One Week Spur Positive Sentiment In Stocks
Analysts have predicted huge expectations from the stock market this week, following last week’s N1.12 trillion gains on the Nigerian Exchange Limited (NGX) driven by impressive earnings in 2023.
Despite profit-taking and portfolio adjustments by fund managers which have impacted stock prices recently, the market rebounded, driven by high volatility, corporate earnings releases, and anticipation of the dividend season.
As the market delves into the peak of the earnings reporting season, sentiments and fundamental earnings factors are steering momentum and liquidity levels.
Market players reacted strongly to early filers, witnessing heightened trading volumes and positive market breadth. The resurgence of buying interest, particularly in banking stocks, propelled the market beyond the psychological 104,000-point threshold.
Analysts at Cowry Assets Management Limited anticipate the continuation of positive sentiments in the local stock market. “However, we foresee a mixed trend with a possibility of profit-taking as investors are likely to continue sectoral rotation, capitalizing on stocks that experience pullbacks to position themselves strategically.
“This rotation strategy is expected to create further buying opportunities, especially in anticipation of more earning releases in the corporate reporting season. Amidst all these, we continue to advise investors to take a position in stocks with consistent track records of dividend payments and strong fundamentals and growth prospects to support earnings growth.”
The chief operating officer of InvestData Consulting Limited, Ambrose Omordion said “As the market enters the peak of the earnings reporting season where sentiments and earnings fundamentals drive momentum and liquidity level as players react to the numbers being provided. These results are expectedly impressive or disappointing, depending on where the pendulum swings. This will drive oscillation and volatility as dividend announcements and corporate actions pour in this month.”
The equities market ended last week on a positive note, gaining N1.12 trillion, and recovering from losses in the previous sessions after the Central Bank of Nigeria (CBN) ordered the harmonisation of reporting requirements on foreign currency exposure of banks.
Thus, the Nigerian Exchange Limited All-Share Index advanced by 1.97 percent week-on-week (W-o-W) to close at 104,421.23 basis points. Consequently, the overall market cap increased by N1.12 trillion in the week by N57.158 trillion.
Sectoral performance for the week displayed a mixed picture. The NGX Industrial index outperformed, recording a 6.36 percent week-on-week gain, while the NGX Consumer Goods index also ended the week positively, rising by 1.30 percent.
Conversely, the NGX Banking and NGX Insurance indexes retreated by 4.52 percent and 4.07 percent, respectively for the week, while the NGX Oil & Gas index recorded a weekly decline of 2.47 percent.
The market breadth for the week was positive as 27 equities appreciated, 64 equities depreciated, and 64 equities remained unchanged. Tripple Gee and Company led the gainers table by 42.05 percent to close at N4.02, per share. Meyer Plc followed with a gain of 20.79 percent to close at N4.30, while Cornerstone Insurance went up by 20.25 percent to close to N1.90, per share.
On the other side, DAAR Communications led the decliners table by 22.22 percent to close at 70 kobo, per share. Eterna followed with a loss of 19.49 percent each to close at N22.10, while SUNU Assurance declined by 19.11 percent to close at N1.82, per share.
Overall, a total turnover of 3.893 billion shares worth N95.147 billion in 69,117 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 2.981billion shares valued at N57.873 billion that exchanged hands the prior week in 67,962 deals.
The Financial Services Industry (measured by volume) led the activity chart with 2.640 billion shares valued at N47.654 billion traded in 31,929 deals; contributing 67.81 percent and 50.08 percent to the total equity turnover volume and value respectively. The Oil and Gas Industry followed with 347.962 million shares worth N4.064 billion in 5,972 deals, while the Conglomerates Industry pulled a turnover of 337.682 million shares worth N4.709 billion in 5,493 deals.
Trading in the top three equities; FBN Holdings (FBNH), Transnational Corporation (Transcorp), and United Bank for Africa (UBA) accounted for 961.288 million shares worth N21.390 billion in 9,966 deals, contributing 24.70 percent and 22.48 percent to the total equity turnover volume and value respectively.
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