The equities market of Africa’s largest economy closed the first trading week of 2021 in the red zone amid sessions of value hunting and profit taking activities.
Stocks that fueled the disappointing move to the south and their rate of decline are Dangote Cement Plc (-8.1percent), Guinness (-5percent), May & Baker (-6.8percent), MTNN (-2.8percent), NAHCo (-1.3percent), Neimeth (-1.3percent) and Oando (-4.1percent).
Others are: Deap Capital Management and Trust (-12percent), ABC Transport (-7.9percent), AIICO Insurance (-0.9percent), Caverton Offshore Support Group (-3.4percent), FCMB (-2.4percent), Portland Paints (-0.8percent), PZ Cussons (-1.9percent), Redstar (-0.9percent), Royal Exchange (-11.5percent), Stanbic IBTC (-0.1percent), Sterling Bank (-1percent), Union Bank (-0.9percent), Unilever (-5percent), and University Press (-2.3percent).
“In spite of the dominance of the Bulls for most of the sessions during the week (evidenced by gains in three of the five trading sessions, and bullish sectoral performances), the index ended the week lower amidst significant declines in the Industrial goods sector”, research analysts at Vetiva said.
The analysts expect a recovery in a new week, “as the current price drop in the Industrial goods sector is expected to drive some buying interest in that region. Also, we anticipate some more positive patronage in the Oil & Gas sector as we continue to see improvement in the prices of Crude oil.”
The Nigerian Stock Exchange (NSE) All-Share Index (ASI) depreciated by 0.37percent in the trading week ended Friday January 8. The market opened the year 2021 with ASI at a record high of 40,270.72 points but it decreased to 40,120.22 points at the close of trading on Friday while listed stocks’ value decreased from N21.057 trillion to N20.978trillion, shedding N79billion.
The local bourse had in the preceding trading week sustained bullish momentum, making the market to close the year 2020 with a record positive return of +50.03percent.
Lagos-based GTI Research analysts had in their stock picks for the review week expected the domestic stock market to resume the New Year on a positive note, “albeit at a modest pace”, given the less attractive nature of the fixed income segment of the capital market.
In the review week, NSE-30 Index which tracks the top 30 companies in terms of market capitalisation and liquidity increased by just 0.06percent; NSE Banking Index (+3.21percent), NSE Consumer Goods Index (+2.58percent), NSE Industrial Index (-2.29percent), NSE Insurance Index (+9.49percent), NSE Oil & Gas Index (+13.16percent), and NSE Pension Index (+1.80percent).
“In 2021, sentiment for stocks depends on the direction of monetary policy, particularly in relation to the yield environment. A sharp reversal of rates is likely to trigger a sell-off in the equities market considering that the current average market price-to-earnings (P/E) valuation multiple (15.2x) is considerably higher than the 5-year historical average (11.9x)”, said analysts at United Capital in their recent note to investors.
The analysts’ prognosis for the Nigerian stock market in 2021 is that domestic interest, fueled by dividend expectations, “is likely to sustain the market rally in first-quarter (Q1) 2021.” However, in the absence of foreign demand, the analysts see a short-term bear market from second-quarter (Q2) to third-quarter (Q3) of 2021.