Ahead of full-year 2014 earnings releases by listed companies, the Nigerian stock market recently witnessed an impressive increase on the buy-side at the Nigerian Stock Exchange (NSE).
Investors are increasingly buying stocks to position themselves for capital appreciation and dividend income as well as bonuses. Investors are keenly awaiting corporates to release their full-year financials, which if impressive could serve to trigger their appetite for more equities.
Having recorded valued increase of N600 billion last week, analysts foresee this trend moderating at the end of this week as investors route to take profit from recent gains.
Though, the stock market took off this week on a positive note, most speculators on Custom Street may see recent gains as an opportunity to cushion previous losses recorded when stocks were at a record low.
As uncertainties bedevilling financial markets gradually fade, this is a good time to invest in stocks that are fundamentally sound for long-term gains. Currently, some stocks at the NSE are trading below their values.
Week-on-week (wow), the benchmark indicator of Nigerian stock market rose by 6.52 percent or 1,798.67 points last week as equities sustained positive momentum and resisted the contagion from volatile oil market.
Recent indicators show that stock market was not down as the CBN moved to unify exchange rates by scrapping the retail Dutch auction system in favour of the interbank market.
Read also: Foreign, domestic investors record lower deals at Nigerian bourse
Except for oil/gas index, all other sectoral indexes at the local bourse have delivered negative returns.
Market review
In the week to Friday 20, 2015, a turnover of 2.083 billion shares worth N22.467 billion in 20,805 deals was recorded on the floor of the NSE in contrast to a total of 1.950 billion shares valued at N27.836 billion that exchanged hands the preceding week in 19,337 deals.
The Financial Services Industry (measured by volume) led the activity chart with 1.645 billion shares valued at N10.726 billion traded in 12,348 deals, thus contributing 78.98 percent and 47.74 percent to the total equity turnover volume and value, respectively.
The ICT Industry followed with a turnover of 148.155 million shares worth N609.070 million in 66 deals, while Conglomerates Industry followed with 122.735 million shares worth N1.013 billion in 1,305 deals.
Also traded during the week under review were a total of 97,786 units of Exchange Traded Products (ETPs) valued at N2.074 million executed in 35 deals, compared with a total of 112,499 units valued at N1.698 million transacted in the preceding week in 36 deals. Similarly, a total of 982 units of FGN bonds valued at N982, 494.07 were executed in 5 deals.
Analysts’ view
“This week, we anticipate the bullish run may subside as profit-taking behaviour takes hold,” said investment analysts at Access Bank plc.
“We expect equities to continue their upswing as more companies declare full-year corporate actions,” said market analysts at Lagos-based Cowry Asset Management Limited.
“The bullish run towards the end of last week is expected to be sustained early this week, though profit-taking should moderate cumulative gains this week,” according to market analysts at Lagos-based United Capital plc.
The analysts said: “While we see the moderated level of uncertainty, gradual recovery in crude oil prices and expected corporate actions as key positives for the market, we expect the uncertainty in the political terrain and fiscal imbalances to continue to constitute a drag on the market.”
Iheanyi Nwachukwu
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