Liquidity, confidence issues sustain hold on NSE index

The challenge of availability of cash and waning investor confidence that has persisted in the nation’s stock market continued to impact on market indices last week.

The Nigerian Stock Exchange (NSE) All-Share Index (ASI) and market capitalisation depreciated by 0.99 percent to close the week at 27,525.81 points and N13.391 trillion respectively.
 
Similarly, all other indices finished lower with the exception of the NSE Insurance Index, NSE MERI Growth Index, and NSE Industrial Goods Index, which appreciated by 1.15 per cent, 0.04 per cent and 0.34 per cent, while the NSE ASeM index closed flat.

Although ASI gained marginally on Wednesday and Friday, the negative sessions outweigh the other positive trading days in the week, dragging the overall index down.
 
Analysts said that the pullback on NSE was largely due to low market inflow, as smart money continues to seat on the sidelines, observing the nation’s mixed macroeconomic indices in anticipations of economic reform policies capable of stimulating productivity and consumption.
 
The force behind the day’s performance remained weak and flat as Money Flow Index read 41.88 points, from the previous session’s 41.72bps, an indication that funds exited some stocks and the market with continued selloffs.

The Chief Research Officer of Investdata Consulting Limited, Ambrose Omodion, said: “We expect the mixed performance to continue in the midst of profit-taking at a time of prevailing low liquidity, oscillating oil price, even as the general market composite index nears it major bottom in the coming weeks. Also, we see the likelihood of a slowdown in Nigeria’s expected Q2 GDP data.

“Discerning investors should target value stocks considering the current low valuation as they position for dividend income and capital gains.”
 
Codros Capital Limited said: “We reiterate our view that the blend of a compelling valuation story and positive macroeconomic environment should propel the market in the medium term. However, we advise investors to tread the cautious trading path in the short term.”

Further breakdown of last week’s trading showed that a turnover of 713.141 million shares worth N13.295 billion was recorded in 16,237 deals, in contrast to 2.337 billion shares valued at N19.712 billion exchanged in 18,379 deals during the preceding week.

The financial services industry (measured by volume) led the activity chart with 401.887 million shares valued at N4.069 billion traded in 8,627 deals, thus contributing 56.35 per cent to the total equity turnover volume. 
 
The conglomerate’s industry followed with 123.330 million shares worth N197.298 million in 755 deals. The third place was the ICT industry, with a turnover of 53.887 million shares worth N5.296 billion in 852 deals.

A total of 4,865 units valued at N76,851.65 were traded last week in 15 deals, compared with 3,943 units valued at N1.684 million transacted in the previous week in 16 deals.
 
Also, 4,336 units of Federal Government Bonds valued at N4.443 million were traded last week in 12 deals, compared with 1,673 units valued at N1.674 million transacted in the following week in 31 deals.
 
About 25 equities appreciated at price during the week, lower than 40 equities in the previous week and 35 equities depreciated in price, higher than 25 equities in the previous week, while 106 equities remained unchanged, higher than 101 equities recorded in the preceding week.