• Monday, May 20, 2024
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BusinessDay

Market outlook tilts towards profit-taking

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 The stock market outlook is in favour of profit-takers, following the huge gain recorded at the Nigerian bourse last week that pushed the yield-to-date (ytd) growth high to 25.04 percent.

The value of equities at the Nigerian Stock Exchange (NSE) rose by a huge N623 billion last week, driven mainly by robust financials posted by most listed companies and renewed appetite from offshore investors for local stocks.

As bargain hunting pervaded stock market, the performance indicators at the Nigerian bourse – All Share Index (ASI) and market capitalisation rallied to a level last seen in 2008. The NSE All Share Index, which opened last week at 33, 159.08 points garnered 1,950.25 points or 5.88 percent to close the week at 35,109.33 points. Also, the market capitalisation of listed equities rose from week-open level of N10.602 trillion to close at N11.225 trillion.

Market watchers noted that optimism boosted by dividend pay-out announcements and heavy trading in banking stocks helped market performance indicators to rise.

In their recent market analysis on some African markets, analysts at StratLink Africa Limited, noted that “investor confidence in the NSE has increased, with domestic investors increasing their share by 61 percent in the first two months in 2013, and by 38.6 percent in 2012. This has been augmented by foreign investors seeking to increase their share in Nigerian companies as part of their global growth strategies.”

The analysts noted that the increase in market cap indicated that investor confidence remained high in the year. “In addition, there have been positive reactions to the results declared during 2012, with earnings for many companies having increased substantially, especially for the banking companies after financial reforms in the sector which led to an increase in lending,” the analysts added.

On the heels of this feat, Cowry Asset Management analysts, said this week, they expect a mix of bargain hunting and profiteering activities “as investors flip their positions for profits following recent capital gains on their stock investments.”

“Market returned to bullish mode as investors improved their stake on large cap equities. As anticipated, the new month may change sentiments as investor look to expand their position and seek bargain windows. We expect more market frenzy as investors consolidate on their current positions,” said analysts at Partnership Investment Company plc.

Though, these analysts noted that attraction of the equities market was being dampened by rising money market rates. “Investors need to focus on growth companies with good fundamentals. Less speculation and more value investing may be more beneficial at this time,” the Partnership Investment Company analysts, noted.

Also, the NSE 30 Index appreciated by 85.10 points or 5.37 percent to close at 1,668.67. Other NSE sectoral indices also appreciated: NSE Consumer Goods, NSE Banking, NSE Insurance, NSE-Lotus II and NSE Industrial Goods rose by 2.53 percent, 2.68 percent, 2.25 percent, 6.16 percent and 9.13 percent, respectively. However, NSE Oil and Gas Index declined by 3.50 percent.

A turnover of 1.511 billion shares worth of N15.867 billion in 20,965 deals were transacted by investors on the floor of the Exchange in contrast with a total of 1.758 billion shares valued at N17.898 billion that exchanged hands the preceding week in 23,958 deals.

“This week, we anticipate more upside potential for stock prices, especially for fast moving consumer goods and banking stocks. This position is hinged on the feel-good-factors pervading the market after recently released positive financial scorecards,” said Tony Monye-led team of analysts at Access Bank plc.

Weekly report for last week showed that 43 equities appreciated in prices, higher than 34 equities in the preceding week. 25 equities depreciated in price, lower than 46 equities in the preceding week, while 128 equities remained constant higher than 116 equities of the preceding week.

Leading the top gainers was Cap plc, which rose from N38.70 to N46.80, after it garnered N8.10 kobo or 20.93 percent. Also in this league of top gainers are: A.G. Leventis Nigeria plc, which rose from N1.50 to N1.8, adding N0.31 kobo or 20.67 percent. Wapic Insurance plc rose from N0.93 to N1.12, adding N0.19 or 20.43 percent.

ABC Transport plc also gained after its share price rose from N0.67 to N0.80, adding N0.13 kobo or 19.40 percent. Ikeja Hotel plc rallied from N0.77 to N0.90, adding N0.13 or 16.88 percent.

Dangote Cement plc also rose from N158.85 to N185, adding N26.15kobo or 16.46 percent; U A C N plc rallied also from N56 to N N64.68, after gaining N8.68 or 15.50 percent.

Access Bank plc rose from N9.12 kobo to N10.44 kobo, adding N1.32 or 14.47 percent. Stanbic IBTC Holdings plc rose from N13.36 to N14.90, adding N1.54 or 11.53 percent. Red Star Express plc rose from N3.60 to N4, adding N0.40 or 11.11 percent.

Investors in some stock were not fortunate to benefit from the market’s Northward movement last week. Most of them are investors in RT Briscoe plc, Costain (WA) plc, UTC Nigeria plc, Neimeth International Pharmaceuticals plc, IPWA plc, Vono Products plc, Cutix plc, Total Nigeria plc, Beta Glass Company plc, and Unity Bank plc.

 

Stories by IHEANYI NWACHUKWU