BY BAMIDELE FAMOOFO
After seven consecutive weeks of bullish run, the NGX benchmark index reversed its gains to bearish region with a 0.75 percent week on week (w/w) loss to 62,568.73 points as profit taking activities resurfaced with sell-offs that hit all kinds of equities across low, medium and high-priced stocks across all market sectors.
This comes despite the gradual return of portfolio investors into the equities market and declining rates from the money market as seen from the last treasury bills auction.
As a result, the year-to-date gain printed at 22.09 percent, motivating investors and portfolio managers to engage in sectoral portfolio rebalancing ahead of the upcoming reporting and earning seasons.
Also, the market capitalization mirrored the index’s southward trajectory, tanking by 0.75 percent week-on-week to reach N34.07 trillion as the market lost over N256.29 billion in 3 out of 5 sessions.
The performance across sectors has predominantly been mixed, with the industrial and oil & gas sectors emerging as the top gainers of the week by 9.01 percent and 1.43 percent week on week.
On the other hand, the banking sector exhibited a lackluster weekly performance, declining by 14.32 percent due to sell-offs witnessed in ACCESSCORP (-20%), FBNH (-22%), ETI (-23%) and FIDELITYBNK (-25%). Also, the insurance sector followed closely with a notable 11.53 percent decrease and then the consumer goods index closed by 2.29 percent week on week due to negative price movements.
Market activity displayed a robust and bullish momentum, evident in average traded volumes and value for the week. The number of weekly deals saw a negative movement by 4.82 percent week on week to reach 54,478 deals, indicating a downswing in sentiment within the trading environment. Moreover, the average traded volume experienced a substantial advancement of 87.40 percent week-on-week, totaling 9.83 billion units. Additionally, the weekly average value expanded by 166.37 percent to N145.41 billion units, compared to N54.59 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 (+33%), MORISON (+31%), and NASCON (+22%) were the leading gainers, showcasing remarkable growth rates. Conversely, CHAMPION (-32%), WEMABANK (-26%), and STERLINGNG (-25%) were among the stocks that experienced declines, leading the laggards’ chart.
This week, we expect the bearish sentiment to continue as market heads for a correction in the short term, creating an attractive entry point for discerning equity investors seeking alpha to continue targeting the fundamentally sound defensive stocks to protect their portfolios as we enter the new reporting and earning seasons. Also, the profit taking activities are expected to persist in the absence of a major catalyst to trigger positive sentiments.
Meanwhile, analysts continue to advise investors on taking positions in stocks with sound fundamentals.
In the bond market, FGN bond yields move northwards for most maturities tracked. In the fixed income market, the value of FGN bonds traded on the secondary market fell for most maturities tracked.
Specifically, the 10-year 16.29 percent FGN MAR 2027, the 15-year, 12.50 percent FGN MAR 2035, and the 30-year, 12.98 percent FGN MAR 2050 debts gained N0.64, N3.72, and N1.54, respectively; their corresponding yields moderated to 11.84 percent (from 12.06%), 13.70 percent (from 14.40%), and 14.30 percent (from 14.55%), respectively.
However, the 20-year, 16.25 percent FGN APR 2037 depreciated by N0.33; its corresponding yield rose to 14.35 percent (from 14.3s0%).
Elsewhere, FGN Eurobonds traded on the international market appreciated across all maturities amid renewed bullish sentiment.
Specifically, the 10-year, 6.50 percent NOV 28, 2027, the 20-year, 7.69 percent FEB 23 2038, and the 30-year, 7.62 percent NOV 28 2047, recorded gains of USD 2.65, USD 4.88, and USD 4.91, respectively, while their corresponding yields contracted to 8.79 percent (from 10.09%), 10.90 percent (from 11.76%), and 10.81 percent (from 11.60%), respectively.
In this new week, experts expect local OTC bond prices to increase (and yields to moderate) as prospective investors demand lower rates in line with rates in the primary market.
