The Nigerian equities market extended its bullish trend last week as investors’ interest in high-priced stocks propelled the Nigerian Exchange Limited benchmark index and market capitalization to hit a new high.
This is as the week ended December 22, 2023 witnessed a positive trajectory driven by investors demand for financial services and blue-chip stocks, creating an environment conducive to the usual Christmas rally.
Persistent rallies reported in four trading sessions of the week positioned NGX All-Shares higher, as well as advancing by 2.26 percent week on week to close at 74,023.27 basis points as against 72,389.23 basis points reported the previous weekend.
The equity market not only achieved remarkable highs but also surpassed historical thresholds throughout the week.
The bullish trajectory persisted amid nuanced market sentiments, with select stocks hitting new 52-week highs in the lead-up to the Christmas week.
Correspondingly, the market capitalization mirrored this upward trend, experiencing a 2.26 percent week-on-week increase to surpass the N40 trillion marks, closing at N40.51 trillion.
Notably, equity investors capitalized on gains, accumulating a total of N894.17 billion over four out of the five trading sessions.
However, market experts insisted that the bullish sentiment was a manifestation of the markup phase and a sustained bull run, a scenario heightened by the prevailing seasonality and the ongoing portfolio rebalancing ahead of the anticipated 2024 earnings reporting and dividend season. This positive momentum coincided with shifts in market fundamentals and liquidity levels, indicating a dynamic landscape.
Sectorial performance review showed a bullish trend reflected across sectors, with notable advancements in the financial services sector. Banking and Insurance stocks led gainers by 3.35 percent and 1.70 percent, respectively.
This surge was attributed to price appreciation in banking institutions such as FIDELITY, STERLINGNG, UBA, ACCESS, and FBNH, along with insurance firms like NEM, MANSARD, and CONHALLPLC. Additionally, the Industrial and Oil & Gas indexes recorded appreciations of 0.33 percent and 0.09 percent, driven by a surge in buying interest in select counters like MULTIVERSE, IMG, WAPCO, ETERNA, and OANDO. However, the Consumer Goods index faced a minor setback of 0.70 percent, driven by notable price declines in ELLAHLAKES, GUINNESS, MCNICHOLS, NB, and NESTLE.
Despite a 31.49 percent decrease in total traded volume, reflecting a week of high activity and positive market breadth, the number of trades rose by 8.56 percent to 35,848 deals. Notably, the weekly traded value experienced a significant advancement of 70.05% week-on-week, closing at N53.79 billion.
At the week’s close, top gaining stocks included INFINITY, DAARCOMM, MULTIVERSE, TRANSCOHOT, and TRANSCORP, securing gains of 61 percent, 50 percent, 41 percent, 36 percent, and 26 percent, respectively.
Conversely, ETRANZACT, THOMASWY, PRESTIGE, and GUINNESS faced declines in their share prices on a week-on-week basis, shedding 12 percent, 10 percent, 10 percent, and 9 percent, respectively.
Meanwhile, ahead of the new week, market analysts from Cowry Research say they anticipate the positive market trend to continue, insisting that investors are expected to engage in profit-taking and bargain hunting for dividend-paying stocks, driven by sector rotation and portfolio rebalancing.
“The market sentiment is expected to be buoyed by high expectations for robust full-year corporate financial results and the attractiveness of high yields, especially in a low-interest-rate environment.
“The strategic reallocation of funds among sectors and adjustments in portfolios to align with changing market conditions are likely to shape trading activities, reflecting investors’ pursuit of optimal risk-return profiles and capitalizing on emerging opportunities.
“Amidst all these, we maintain our advice to investors on taking positions in stocks with sound fundamentals and whose earnings yield and earnings per share support higher payout ratio. Amidst all these, we maintain our advice to investors on taking positions in stocks with sound fundamentals and whose earnings yield and earnings per share support higher payout ratio,” they stated in their weekly report.
