What Analysts Are Saying About This Week Trading the Nigerian Stock Market

According to analysts at the Nigerian Exchange (NGX) Limited, the movement noticed in the stock market recently is a result of the up-and-down movement in investors' optimism. And this is predicted to continue this week.

Market players are expecting new triggers to fuel more purchasing activity, such as due to the July inflation data release.

The market is ready for a change as excitement surrounds the prospect of positive news that might spark another wave of purchasing enthusiasm. 

The decrease in rates inside the Treasury Bills' primary market offers is noteworthy, with reductions to 5%, 5.9%, and 9.8% for the 91-day, 182-day, and 364-day instruments, respectively. This pattern reflects continuous portfolio rebalancing and sector rotation, which is aided by strong business results.

Analysts Optimism

Looking ahead to the new week, analysts at Cowry Assets Management Limited said: “We anticipate a mix of sentiments fueled by bargain hunting, amidst the backdrop of anticipated positive developments. 

“Investors will be closely monitoring corporate earnings, especially among first-tier banks, as they navigate the landscape in the context of the forthcoming July inflation data release. Meanwhile, we continue to advise investors on taking positions in stocks with sound fundamentals.”

Cordros Securities Limited said: “We expect market performance to remain mixed in the week ahead as investors rebalance their portfolios based on an assessment of corporate earnings released thus far for H1, 2023. 

“Nevertheless, we expect earnings from the Tier-1 banks in the coming week(s) to spur positive market sentiments, especially given the anticipation of interim dividends. 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 Trade Went in the Stock Market

Last week's performance on the local exchange was low, but investor interest in MTN Nigeria Communications (MTNN) and several Tier-1 Banking companies ensured the market concluded favourably. 

In particular, the All-share index gained 0.20% to close at 65,325.37 points. Similarly, market capitalization increased by N93 billion to N35.572 trillion.

Year-to-date All-Share Index performance was impressive, with an enhanced return of 27.46%, demonstrating the Nigerian market's tenacity in the face of global uncertainty.

In terms of sector performance, the NGX Banking and Insurance indexes led with 1.26% and 0.73% week-on-week gains, respectively. The NGX Consumer Goods, Industrial Goods, and Oil & Gas indexes, on the other hand, declined by 0.92%, 0.39%, and 0.32%, respectively.

This negative trend has been impacted by cautious investor sentiment as well as sell-offs in select mid and large-size firms. Investors are cautiously examining the impact of current market and economic conditions on these industries.

The market breadth for the week was negative, with 41 shares rising in price, 44 falling in price, and 70 remaining stable. Guinea Insurance led the gainer's chart by 50.00%, closing at 39 kobo per share. The Initiates Plc (TIP) gained 30.56% to settle at 94 kobo, while Chellarams gained 29.79% to conclude at N4.40 a share.

On the other hand, John Holt led the loser's table by 18.37%, closing at N1.20 per share. Dangote Sugar Refinery followed with a 12% drop to settle at N33.00, while RT Briscoe fell 10.42% to close at 43 kobo per share.

Last week, investors on the floor of the Exchange traded 1.741 billion shares worth N25.087 billion in 30,652 transactions, compared to 2.575 billion shares worth N29.615 billion sold in 37,713 transactions the previous week.

The Financial Services Industry (measured by volume) dominated the activity chart with 1.244 billion shares worth N12.616 billion exchanged in 13,398 transactions, accounting for 71.43% of total equity turnover volume and 50.29% of total equity turnover value.

The Conglomerates Industry came in second with 133.034 million shares worth N575.673 million traded in 1,572 transactions, while the ICT Industry traded 87.649 million shares for N2.292 billion in 2,404 transactions.

Sterling Financial Holdings Company, FBN Holdings, and Universal Insurance (measured by volume) accounted for 518.847 million shares worth N3.917 billion in 1,901 transactions, accounting for 29.80% and 15.61% of total equity turnover volume and value, respectively.