Market indices rebound as investors patronise low price stocks

After several weeks of persistent decline, the equity market rebounded at the end of last week’s transactions, as the All-Share Index (ASI) and market capitalisation of the Nigerian Stock Exchange (NSE) appreciated by 0.4 per cent to close the week at 29,966.87 points and N13.206 trillion respectively.

Similarly, all other indices finished higher with the exception of the NSE Premium, NSE Insurance, NSE-AFR Bank Value and three others.

Analysts, at the weekend, linked the recovery to market forces, as players and bargain hunters took advantage of the persistent low valuation of listed equities to reposition their portfolios for second quarter (Q2) earnings reporting season.

They also argued that the market expects the announcement of the government’s new cabinet, economic team and a blueprint from the fiscal authority to kick off implementation of the 2019 budget.

According to them, discerning investors are taking advantage of low valuation to position ahead of March year-end numbers and second half interim dividend stocks.

Specifically, the Chief Research Officer of Investdata Consulting Limited, Ambrose Omodion, said: “We expect the mixed performance as the end of quarter window dressing by fund managers, portfolio repositioning and balancing for month end and the Q2 earnings reporting season continue.

“Bargain hunters are likely to hit the market any moment from now, while discerning investors are taking advantage of low valuation to position ahead of March year-end numbers and second half interim dividend stocks.

“They may also take into consideration the expected economic reforms as government announces its much-awaited new cabinet, just as plans by the Central Bank of Nigeria (CBN) to reduce banks’ participation in government securities is expected to boost private sector lending to drive economic activities and investment.”

Analysts at Codros Capital Limited said: “Following bargain hunting across bellwether stocks like Guaranty Trust Bank, Nestle and Nigerian Breweries, the Nigerian equities market halted its three-week losing streak, as the benchmark index increased by 0.39 per cent w/w to settle at 29,966.87 points. Our outlook for equities in the short to medium term remains conservative amid the absence of a positive catalyst.”

Further breakdown of last week’s transactions showed that a total turnover of 1.77 billion shares worth N28.036 billion was recorded in 18,660 deals by investors on NSE, lower than a total of 7.476 billion units valued at N91.107 billion that was exchanged in 17,192 deals during the preceding week.

The financial services industry (measured by volume) led the activity chart with 1.336 billion shares valued at N17.894 billion traded in 8,783 deals; thus contributing 75.44 per cent to the total equity turnover volume.

The consumer goods industry followed with 115.835 million shares worth N5.282 billion in 2,969 deals. The industrial goods industry ranked third with a turnover of 90.705 million shares worth N1.707 billion in 1,991 deals.

Trading in Zenith Bank Plc, Guaranty Trust Bank Plc and Wema Bank Plc (measured by volume) accounted for 840.903 million shares worth N15.266 billion in 2,938 deals, contributing 47.49 per cent to the total equity turnover volume.

36 equities appreciated in price during the week, higher than 34 in the previous week. 32 equities depreciated in price, lower than 33 equities in the previous week, while 100 equities remained unchanged, lower than 101equities recorded in the preceding week.