Eroding gains may end NSE brief reign as best performing stock market

Nigeria stock market again kicked off this week on a negative note amid continued caution from investors. With this trend, the gains that were recorded by the Bourse gradually erodes, which may end its brief reign as the best performing stock market in the world in January.“January started so well: February is another matter. Nigeria’s stock market was world’s best-performing in January…”, Coronation Research said in their recently weekly titled “February tougher than January”.

The record negative seen on Monday February 10 was on the back of losses in highly capitalised stocks like Nestle, MTNN, Lafarge Africa and GTBank.

The renewed sell pressure which resulted to a 1.05percent decline in the market’s benchmark Index also led to a loss of about N152billion in value of listed stocks. The stock market’s year-to-date (ytd) positive return has decreased to 3.47percent. Only 16 stocks gained as against 17 losers.

The Nigerian Stock Exchange (NSE) All Share Index (ASI) decreased to 27,772.19 points from preceding day high of 28,067.09 points while the value of listed equities dropped to N14.464trillion from N14.618 trillion seen last Friday. In 3,487 deals, equity investors exchanged 200,155,486 units valued at N1.922billion.

All sectoral indexes closed negative except NSE Industrial Goods, and NSE Insurance that gained. FBN Holdings, Transcorp, Zenith, UACN, and Fidelity Bank were actively traded stocks. Nestle Nigeria Plc recorded the highest decline after it share price dropped from N1380 to N1242, losing N138 or 10percent, followed by MTN N which dropped from N117 to N115, after shedding N2 or 1.71percent. Lafarge Africa Plc was also down from N15.3 to N15.05, losing 25kobo or 1.63percent, while GTBank Plc joined the laggards after its share price dropped from N29.5 to N29.3, losing 20kobo or 0.68percent. On the gainers table BUA Cement rallied most, from N35.4 to N36, adding 60kobo or 1.69percent, followed by UPDC REIT which advanced from N3.2 to N3.4, adding 2kobo or 6.25percent.

In their view, Cordros Research analysts noted that the trend witnessed last week will likely persist this week, “as the dual impacts of the weakening sentiment and mixed earnings performances during earnings season are expected to pressure market returns.” “Nonetheless, we advise investors to take positions in fundamentally justified stocks”, the analysts said in their February 7 note.

“With significantly lower turnover in the session and negative market breadth, we believe the current global macroeconomic situation will continue to determine market movement, while discerning investors will cherry-pick on fundamentally sound names.

“Barring any loss in high-cap stocks as seen today (Monday) in Nestle, we expect the market to trade sideways in the next session”, according to equity research analysts at Vetiva Securities.