Stock Market Gains N255bn On Renewed Investors’ Interests
The nation’s stock market sustained its bullish performance on Thursday, gaining N255bn in two days as investors took positions in low-priced stocks on the Nigerian Stock Exchange.
The equities market posted a gain of N120bn on Wednesday, its biggest daily gain in about two months, and an additional N135bn was recorded as major gains in the banking sector pushed the market higher on Thursday.
Analysts said contrary to opinions that the bullish trend recorded was on the back of President Muhammadu Buhari’s assignment of portfolios to ministers, investors were merely taking advantage of low-priced stocks.
A research analyst at Cordros Capital Limited, Wahab Mustapha, in an interview with our correspondent, said the bullish trend observed in the market was on the back of impressive earnings posted by companies and dividend yield, rather than on the resumption of new cabinet members.
He stated that the dividend yield of heavyweight stocks brought about renewed interests and bargain hunting in the stock market.
Mustapha said, “Investors are not really expecting anything new from the sitting President and that is because the policy of the current administration has been somewhat dogmatic.
“President Buhari has been keen on not moving the PMS price, which the market would like to see because taking away petrol subsidy, for instance, would have a huge impact on the revenue of the government.
“Also, saying the naira is not going to move an inch between now and the next 12 months is part of the key things investors are looking out for.”
The Managing Director, Afrinvest Securities Limited, Ayodeji Ebo, said the gains recorded in the market would be short-lived.
According to him, domestic investors are taking positions in fundamentally low-priced stocks, which he notes as driving the gains in the market.
Ebo stated that the implementation of key economic policies was needed to drive and sustain gains in the stock market.
He said, “The stock market will revert to its losing trend; investors had better be prepared for that.”
At the end of trading on Thursday, buying interests were recorded in MTN Nigeria Communications Plc, Nestle Nigeria Plc and Dangote Cement Plc.
The All Share Index appreciated by 1.01 per cent to settle at 27,629.66 basis points as the year-to-date loss improved to -12.1 per cent.
The market capitalisation of equities listed on the floor of the NSE increased from N13.307tn on Wednesday to N13.442tn on Thursday.
Activity level declined as volume and value traded dipped by 25.1 per cent and 0.4 per cent, respectively, to 272.601 million units and N4.498bn.
The most active stocks by volume were Zenith Bank Plc (54.3 million units), Guaranty Trust Bank Plc (38.2 million units) and Transnational Corporation of Nigeria Plc (32.1 million units) while the top traded stocks by value were GTB (N1bn), Zenith Bank (N977.5m) and Nestle (N897.5m).
Performance across sectors was largely bullish as the oil and gas index emerged the lone loser, down by 0.31 per cent on the back of price depreciation in MRS Oil Nigeria Plc and Oando Plc.
On the flip side, the banking index led the gainers, up by 2.54 per cent, following bargain hunting in Zenith Bank and GTB.
The consumer goods index gained 0.81 per cent due to major gains recorded in Nestle and Nigerian Breweries Plc.
The industrial goods appreciated by 0.70 per cent, buoyed by gains in Cement Company of Northern Nigeria Plc and Dangote Cement Plc.
The insurance index also advanced by 0.56 per cent due to buying interest in Wapic Insurance Plc and Aiico Insurance Plc.
Investor sentiment strengthened as 22 stocks gained against 13 losers.
The top gainers were Eterna Plc, Ecobank Transnational Incorporated Plc, Wapic Insurance, Jaiz Bank Plc and Honeywell Flour Mills Plc, which saw respective gains of 10 per cent, 9.49 per cent, 8.82 per cent, 5.41 per cent and 4.90 per cent.
Analysts at Afrinvest Securities Limited said they expected the market to remain bearish as the broader investor sentiment in the economy remained weak.
