Investors pocket N570bn profit in equities market as strong interests spur bullish sentiments



Uba Group

Investors in the Nigerian equities market smiled at their respective banks, last week, with a gain of N570.52 billion.

Market capitalization, due to the capital gain, increased by 2.04 percent to N28.53 trillion in the trading week ended April 28, 2023 while year to date return increased to 2.25 percent.

Resultantly, the ASI inched higher by 2.04 percent week on week to close at 52,403.51 points.

A review of the performance of the market showed that there was increased buying activity as the local bourse traded last week with positive momentum despite profit taking in some of the major counters that had rallied recently on enhanced liquidity, remarkable corporate earnings and actions in form of dividend announcement and payments.

The increased buying activity in selected sectors and stocks pushed the benchmark NGX All Share Index to close higher, trading above the 52,000 psychological point mark, which extended the Bull Run into the last trading day of April.

Across the sectors this week, performance was largely on a bullish trend across the indices under our purview except for the Oil & Gas Index which lost by 0.14 percent week on week. On the other hand, upbeat investor sentiments drove price appreciation in the Consumer Goods (+5.18%), Insurance (+2.03%), Banking (+1.70%), and the Industrial Goods (0.24%) indices on the back of positive price movements across the sectors.

At the close of the week, the level of market trading activities was positive as we saw the total number of deals surged to 24,044 by 42.64 percent week on week as market players recorded higher traded volumes by 257.91 percent for the week to 14.03 billion units that was valued at N59.01 billion, which is an increase by 277.76 percent week on week on increased buying interest.

Meanwhile, the top-gaining securities for the week were HONEY FLOUR (+35%), CADBURY (+32%), and CHAMS (+17%), while the laggards this week were NB (-11%), OKOMUOIL (-7%), and NESTLE (-3%).

“In the week to come, we expect to see mixed sentiment on profit taking and reaction to corporate earnings, as more Q1 earnings hit the market in the midst of price adjustments and dividend payments. However, we continue to advise investors to trade on companies’ stocks with sound fundamentals and a positive outlook,” stock market analysts at Cowry Assets Limited said in a report.

In line with analysts’ expectations, in the review week, the CBN refinanced N131.46 billion worth of T-bills via the primary market at lower stop rates for most maturities amid increased investors’ demand for short-term government securities, as implied by a bid-to-cover ratio of 6.23x compared to 1.87x at the prior auction at the money market.

Specifically, stop rates for 91-day (bid to cover: 1.85x, last 1.36x), and 364-day bills (bid to cover: 6.63x, last 1.90x) moderated to 5.30% (from 6.00%), and 10.17 percent (from 14.70%), respectively.

However, given the low demand levels, stop rates were unchanged at 8 percent for the 182-day bills. Elsewhere, in response to the increase in stop rates for all-day bills, activity at the secondary market was bullish as NITTY yields for 1 month, 3 months, 6 months, and 12 months maturities declined to 4.34 percent (from 5.82%), 5.76 percent (from 7.07%), 6.72 percent (from 9.06%), and 10.15 percent (from 13.79%), respectively.

Meanwhile, OMO activities were muted in the absence of maturing and auctioned bills. However, money market experts observed that financial system liquidity improved, boosted by FAAC inflows (N350 billion) and FGN bond maturity and coupon repayments worth N935 billion. Hence, NIBOR declined for all tenor buckets: Overnight funds, 1 month, 3 months, and 6 months crashed to 4.34 percent (from 5.82%), 5.76 percent (from 7.07%), 6.72 percent (from 9.06%), and 10.15 percent (from 13.79%), respectively.