Banking stocks drive bullish sentiment on NGX as market cap records N1.3trn gain

  • Naira firms up against dollar in I&E window, depreciates in parallel market


Uba Group

The bulls resurfaced last week on the NGX as the benchmark index soared higher by 3.89 percent week- on- week to 65,003.39 points on the back of strong buying interests of investors especially in banking stocks that fueled the weekly rally.

The hope of impressive half-year scorecards by the early filers and market movers led to stock and sectoral repositioning by portfolio managers while others took bets on the possible outcome of this week’s Monetary Policy Committee Meeting.

Consequently, the year-to-date gain of the index printed at 26.83 percent, motivating the market capitalisation in the northward trajectory, as it advanced by 3.89 percent week-on-week to hit N35.39 trillion as the market gained over N1.33 trillion in 4 out of 5 sessions.

The performance across sectors has predominantly been bullish, with the banking and insurance sectors fueling the life of bullish party with +15.81 percent and +5.65 percent w/w gains due to positive price movements in Sterling Holdings Plc, Sovereign Insurance Plc, Ecobank Transnational Incorporated, Mansard Plc, and FBN Holdings Plc.

Also winning during the week, were the industrial goods (+2.80%), consumer goods (+1.67%) and oil & gas (+0.64%) sectors resulting from price appreciations in Livestock Plc, UACN Plc, Unilever Nigeria Plc, Nigerian Breweries Plc and Eternal Oil Plc during the week.

Market activity displayed a downbeat in momentum, evident in average traded volumes and value for the week.

The number of weekly deals saw a negative movement by 23.92 percent week on week to reach 41,446 deals, indicating a downswing in sentiment within the trading environment.

Moreover, the average traded volume experienced a southward movement by 57.46 percent week-on-week to 4.18 billion units. Additionally, the weekly average value contracted by 31.88 percent to N99.05 billion units, compared to N145.41 billion in the previous week.

Looking at the performance of specific stocks, several individual stocks stood out in terms of their performance during the week. Courtville Plc (+33%), Morison Plc (+31%), and NASCON Plc (+22%) were the leading gainers, showcasing remarkable growth rates. Conversely, CHAMPION (-32%), Wema Bank Plc (-26%), and STERLINGNG (-25%) were among the stocks that experienced declines, leading the laggards’ chart.

This week, stock market experts expect the bullish sentiment to continue as corporates continue to churn out their half-year scorecards, while equity investors continue taking bets on the market based on the possible outcome of this week’s monetary policy meeting in the face of portfolio repositioning and the hope tide of impressive H1:2022 corporate earnings. Meanwhile, analysts continue to advise investors on taking positions in stocks with sound fundamentals.

On the flipside, the naira trades mixed across foreign exchange markets as the dollar weakened at the investors’ & exporters’ window in the review week.

Thus, the naira depreciated by N50.30 or 6.17 percent w/w to N865/$1 from N814.70/$1 at the parallel market as users continue their prowl ease of dollar access and availability. On the contrary, at the investors’ and exporters’ FX window, the naira edged the United States’ dollar by N26.08 or -3.24 percent w/w to close at N777.82/$1 from N803.90/$1 in the last week despite the growing demand for the greenback. This comes as traders continue to position themselves in a bid to ascertain the fair value of the naira.

In the review week, the local currency edged the United States’ dollar across the short end of the forward contract market by +0.39 percent, +0.16 percent, +1.07 percent to close at N781.61/$1, N789.88/$1, and N798.14/$1 at the 1-month, 2-months, and 3-month forward contracts. On the other hand, the dollar ruled the week as it appreciated against the naira by +0.29% and +0.66% w/w to close at N822.93/$1 and N872.51/$1 at the, 6-months and 12-months tenor contracts respectively.

Elsewhere, bullish sentiment was sustained in the oil market with the WTI and Brent Crude up on course for a fourth straight week of gains on improved sentiments from China’s plan to bolster the economy.

Thus, oil prices closed on a weekly high on Friday at $80.79 per barrel. Also, the Bonny Light crude price exhibited an upward trend by 12bps w/w, to close at $81.78 per barrel from $81.88 per barrel in the previous week.