NGX Might Likely Experience Bearish Run This Week as Investors Look for Coverage

According to this week's analysis, there has been a forecast that the current bearish trend, which lasted last week, will continue this week as investors look for coverage in fixed-income instruments following forthcoming dividend payments.

Last week, trading at the Nigerian stock market revealed the first significant loss in over 16 weeks, where the market dominated in the bullish/Santa Claus run. This loss increased sales sentiment among investors who traded in local stocks in the country. The reason why many investors dive into selling equities is to rebalance themselves and safeguard their portfolios.

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The LEADERSHIP says, as I quote, "This adjustment precedes the expectations set for the Monetary Policy Committee (MPC) meeting this month and follows the recent surge in treasury rates to a nearly seven-year high. This portends that the Central Bank of Nigeria (CBN) is signalling a return to orthodox monetary policy tools to curb inflation, and the move to entice foreign investors back into Nigeria's economy adds to the backdrop."

What Analysts From Cowry Assets Management Limited Are Saying

• The current bearish trend persists as investors seek refuge in fixed-income instruments due to the recent high yields seen amid dividend expectations and increased market volatility ahead of the January Consumer Price Index (CPI) data from the NBS and the impending Monetary Policy Committee meeting this February.

• However, a pullback at this juncture is expected to strengthen upside potential. Amidst all these, we continue to advise investors to take positions in stocks with consistent track records of dividend payments and solid fundamentals and growth prospects to support earnings growth.

Also, it was reported that Ambrose Omordion, the CEO of InvestData Consulting Limited, dropped a comment. He said,

• We expect bear sentiment to continue as investors run for safety in fixed-income instruments due to high yields in the face of dividend expectations and volatility ahead of January CPI and upcoming policy meeting, while pullbacks at this point will add more strength to upside potential. As such, investors should take advantage of price correction. They are also looking at trends and events globally and domestically.

A Look At Friday Trading Session Last Week 

Last week's trading session closed negatively following profit-taking activities that ruled the market following weak market breadth. Market capitalisation was down by N1.42 trillion to close at N55.735 trillion.

The NGX All-Share Index dropped by 2.45% week-on-week to close at 101,858.37 points.

The NGX Banking and NGX Industrial indices led the losses to decline by 6.86% and 4.16%, respectively. Also, NGX Insurance, NGX Oil & Gas, and NGX Consumer Goods indices recorded a weekly loss of 1.48%, 0.40%, and 0.14%, respectively.

NGX market breadth for the week was negative, as 20 equities gained, 68 equities depreciated, and 66 equities remained unchanged. 

Top Gainers: Meyer led with 60.70% to close at N6.91 per share. Juli followed with a 44.29% gain to close at N1.01, while Geregu Power increased by 19.00% to close at N675.90 per share.

Top Losers: Eterna led with 18.78% to close at N17.95 per share. Abbey Mortgage Bank followed by 18.39% to close at N2.44, while Unity Bank declined by 17.79% to close at N2.31 per share.

The total turnover of 2.478 billion shares worth N47.856 billion in 54,982 deals was traded last week by investors on the floor of the exchange, in contrast to a total of 3.893 billion shares valued at N95.147 billion that exchanged hands the prior week in 69,117 deals.

Other Reports From Last Week Analysis

The Financial Services Industry (measured by volume) led the activity chart with 1.687 billion shares valued at N28.514 billion traded in 25,751 deals, contributing 68.10% and 59.58% to the total equity turnover volume and value, respectively.

The Conglomerates Industry followed with 210.272 million shares worth N2.988 billion in 4,419 deals, while the Oil and Gas Industry traded a turnover of 203.777 million shares worth N2.139 billion in 4,544 deals.

Trading in the top three equities, FBN Holdings (FBNH), Transnational Corporation (Transcorp), and Jaiz Bank Plc (measured by volume) accounted for 732.804 million shares worth N13.705 billion in 7,040 deals, contributing 29.57% and 28.64% to the total equity turnover volume and value respectively.