Analysts Predict That Stock Market Will Continue Positive Trend This Week

Analysts predict that the Nigerian stock market's positive trend would continue this week as more corporates disclose their first-half (H1) year results, owing to increased investor mood.

Despite sell pressure and relatively low average volume and value, market participants adjusted their portfolios while monitoring corporate quarterly scorecards. This result is consistent with analysts' expectations, and they forecast additional upside.

According to analyst research, investors have been focused on value-oriented sector rotation, favouring blue-chip and small-cap companies. Last week, several firms delivered unexpected results, while others fell short of market expectations, resulting in significant price changes. Furthermore, with the latest rate rise making fixed-income instruments more appealing, cautious investors are looking into potential inflation hedging methods inside the stock area.

Analysts Optimism

Cowry Assets Management Limited analysts predicted a "positive outlook from the local bourse driven by portfolio rebalancing and opportunities to hedge against inflation" heading into the new week. While certain industries may experience problems, value-oriented industries may benefit from corporate activities and favourable earnings releases. Meanwhile, we continue to urge investors to buy firms with strong fundamentals."

"We believe earnings from Tier-one banks in the coming week(s) will support positive sentiments on the bourse, especially given the anticipation of interim dividends," analysts at Cordros Securities Limited said. “In the medium term, we expect investors’ sentiments to be influenced by developments in the macroeconomic landscape and the movement of yields in the fixed-income market. Overall, we reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings.”

How Last Week’s Trading Activities Went

Last week, the Nigerian stocks market moved up as investors' interest in MTN Nigeria Communications (MTNN) propelled the All-Share Index up 0.22% week on week (W-o-W) to 65,198.08 points. Similarly, market capitalization climbed by N77 billion to N35.480 trillion at the end of the week.

Sector performance was uneven, with the NGX Insurance index topping the gainers with a 5.88% weekly gain. The NGX Consumer Goods index increased by 2.27%, while the NGX Industrial Goods index increased by 0.23%, owing to positive sentiment in mid and large-size companies. However, the NGX Banking and Oil & Gas sectors indexes fell by 2.13%and 0.68%, respectively, as investors weighed the effect of the rate rise and rising fixed income rates.

The market breadth for the week was negative, with 42 shares rising in price, 52 falling in price, and 61 remaining stable. SUNU Assurances Nigeria topped the gainers by 55.00%, closing at 93 kobo per share. Chellarams gained 45.49 % to conclude at N3.39, while Abbey Mortgage Bank gained 32.73% to settle at N1.46 a share.

On the other hand, John Holt led losers by 33.18% to N1.47 per share. Following that, Omatek Ventures fell 30.61% to settle at 34 kobo, while Sovereign Trust Insurance fell 28.57% to close at 50 kobo, per share.

Last week, investors on the floor of the Exchange traded 2.575 billion shares worth N29.615 billion in 37,713 transactions, compared to 2.854 billion shares worth N37.645 billion in 41,547 transactions the previous week.

The Financial Services Industry (measured by volume) dominated the activity chart, with 1.921 billion shares worth N16.514 billion exchanged in 17,689 transactions, accounting for 74.60% and 55.76% of total stock turnover volume and value, respectively. The Conglomerates Industry came in second with 160.206 million shares worth N625.021 million traded in 1,811 transactions, while the Oil and Gas Industry traded 152.046 million shares for N1.332 billion in 2,403 transactions.

The top three equities, AIICO Insurance, FCMB Group, and Transnational Corporation (Transcorp), accounted for 636.217 million shares for N1.737 billion in 2,751 transactions, accounting for 24.71% and 5.86% of total equity, respectively.