Stock market sustains bearish sentiment in new week

The bearish sentiment seen lately at the Nigerian equities market continued on Monday April 8, as more investors stayed on the sell-side of the bourse at the beginning of the holiday-shortened week.

The market decreased by 0.38 percent or N222billion at the close of trading, pushing lower the market’s return year-to-date (YtD) to 37.81 percent.

United Capital research analysts said on Monday that they expect the bearish sentiments amongst investors to persist in the local equities market given the recent developments in the fixed-income market.

According to them, “the impact of the high yields in the fixed-income market will continue to drive selloffs as investors switch their asset classes to less risky assets. However, we expect pockets of bargain-hunting activities across dividend-paying stocks, as the dividend season commences in full”.

Stocks like Abbey Mortgage Bank, Access Holdings, Transcorp, United Capital and GTCO were most traded on the Nigerian Bourse. In 5,302 deals, investors exchanged 245,856,711 shares worth N3.221billion.

The Central Bank of Nigeria (CBN) is scheduled to hold a Treasury Bills (T-Bills) Primary Market Auction (PMA) on April 11, 2024. At the PMA, existing T-Bills totalling N149.64billion (N2.78billion, N3.02billion and N143.84billion across the 91-day, 182-day, and 364-day instruments, respectively) will mature and be rolled over.

The Nigerian Exchange Limited (NGX) All-Share Index (ASI) and Market Capitalisation depreciated further on Monday from preceding trading day’s highs of 103,437.67 points and N58.498 trillion respectively to 103,047.25 points and N58.276 trillion.

“This week, we anticipate a mixed performance in the equities market as investors respond to fresh corporate actions and adjust their positions strategically in anticipation of dividend payouts. There’s likely to be a shift in focus towards the fixed income market, influencing short-term investment decisions,” Futureview analysts said in their April 8 note to investors.

“Nevertheless, we anticipate a resurgence of buying interest in the equities market, driven by upcoming corporate actions and earnings reports, which will attract investors looking to benefit from dividend payments. Our recommendation to investors is to consider investing in high-quality stocks backed by strong fundamentals,” Futureview analysts added.

Meristem research analysts said, “We anticipate increased activity in the local bourse this week, compared to the previous week. Particularly, we expect a more positive response to the banking sector recapitalisation which contributed to a decline in banking sector stocks last week”. “Also, we envisage minimal flow of fund from the equities market to the fixed income market as investors have largely priced in the expected stop rates at the upcoming T-Bills auction. However, we do not rule out profit-taking activities on certain stocks, as investors reposition in anticipation of the release of first-quarter (Q1) 2024 earnings results. Ultimately, we expect the NGXASI to record week-on-week gain this week,” they noted further in their recent market preview.