Market Analysts Predict Bearish Continuation in This Week’s Trading

Top market analysts have stated that they anticipate the current trend of downturns in equity prices to continue as market fundamentals shift in the face of rising volatility, portfolio rebalancing, and investor and fund manager sector rotation.

The stock market is said to have also experienced low trade volume and value due to investors selling their stocks, despite the strong earnings performance reports from the top banks and the impressive payout ratio achieved by dividend growth thus far. This contributed to another week of bearish sentiment in the equities market.

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The market's decline was attributed to measures of economic challenges and mixed corporate earnings caused by the anticipation of the release of March's consumer price inflation data.

An Overview of Last Week's Trading Activities

Following the federal government's declaration of April 9–11, 2024, as public holidays in observance of Eid al-Fitr (Muslim Sallah), the local stock market closed the week negatively, following the market only opening for two trading days last week.

The benchmark index closed at 102,314.56 points, signifying a weekly (W-o-W) decline of 1.09%. While the market capitalisation declined to N57.865 trillion, combined with the N633 billion loss experienced the previous week.

The NGX-Banking index closed at 7.22% week over week, indicating a bearish market performance. The NGX Consumer Goods index dropped 1.33% week over week, while the NGX Insurance index saw a weekly decline of 2.45%.

For the week, the NGX Industrial Goods index dropped by 0.23%, and the NGX Oil & Gas index fell by 0.28%.

Market breadth was negative, with 19 equities appreciating, 40 equities depreciating, and 95 equities remaining unchanged. 

Top Gainers: Morison Industries led the chart with 20.75% to close at N2.56 per share. It was followed by Oando, which gained 10.57% to close at N12.55, while Transnational Corporation (Transcorp) went up by 10.33% to close at N14.95 per share.

Top Losers: Access Holdings led the chart with 14.60% to close at N19.30 per share. United Capital followed with a loss of 13.92% to close at N20.10, while Guaranty Trust Holding Company (GTCO) declined by 13.75% to close at N41.40 per share.

There was also a total turnover of 1.132 billion shares worth N28.650 billion in 21,921 deals traded last week by investors on the Exchange's floor, in contrast to 3.680 billion shares valued at N57.892 that exchanged hands the previous week in 40,726 deals.

The financial services industry is led by volume, contributing 75.94% and 71.99%, respectively, to the total equity turnover volume and value, with 859.646 million shares valued at N20.624 billion traded in 12,297 deals.

It was also reported that the conglomerate industry followed with 107.940 million shares worth N1.461 billion in 1,346 deals. In comparison, the consumer goods industry traded a turnover of 51.443 million shares worth N1.921 billion in 2,658 deals.

Trading in the top three stocks comprised 447.033 billion shares worth N10.745 billion over 3,513 deals by United Bank for Africa (UBA), Zenith Bank, and Abbey Mortgage Bank. These three banks contributed 39.49% and 37.50% to the total equity turnover volume and value, respectively.

What Analysts Are Saying

The chief operating officer of InvestData Consulting Limited stated, 

• We expect mixed sentiment and position-taking as players digest banking earnings with dividend announcements while taking advantage of low valuations to position and rebalance their portfolios.

• This is amid volatility and pullbacks that strengthen upside potential. As such, investors should take advantage of price corrections and examine trends and events globally and domestically.

While Cowry Assets Management Limited said, 

• The current trend of corrections is expected to persist as market fundamentals change, volatility increases, portfolio rebalancing, and sector rotation by investors and fund managers.

• Investors will closely monitor expected earnings numbers, published macroeconomic data, and government policy direction for further guidance. Meanwhile, we continue to advise investors to take positions in stocks with sound fundamentals.