Stock market records five-week bullish run as investors take N110.42bn profit



Uba Group

The bullish momentum on the Nigerian Exchange persisted for the fifth consecutive week by 0.35 percent w/w on bearish divergence as the benchmark index stayed above the 59,000-index point to close at 59,206.63 points with gains in 3 out of 5 sessions ahead of the second quarter window dressing by portfolio managers.

Resultantly, the market cap at the end of the trading session in the week ended June 23, 2023, advanced by 0.35 percent w/w to N32.24 trillion as equity investors took profit worth N110.42 billion and the year-to-date return of the index stood at 15.52 percent.

Across the market sectors, the performance was widely bullish and was led by gains in the Insurance sector which closed the week by 3.22 percent and was trailed by the oil & gas sector (+2.97%), industrial goods (+2.56%) banking (+1.13%) and consumer goods (+4.16%) sectors accordingly.

Elsewhere, market activities were downbeat in lacklustre momentum on averagely low traded volumes and deals brokerage as the total weekly deals slipped by 10.07 percent w/w to 39,764. Also, the average traded volume reversed last week’s gains by 21.09 percent w/w to 3.37 billion units while the average weekly value plunged by 32.38 percent w/w to N41.99 billion.

At the end of the week, FTNCOCOA (+41%), CHAMS (+36%) and JAPAULGOLD (+33%) were the leading gainers for the week while JAIZBANK (-19%), STERLINGNG (-13%) and ELLAHLAKES (-10%) led the laggards’ chart for the week.

In this new week, stock analysts at Cowry Research anticipate the market to maintain its mixed sentiment on continued profit taking as investors reshuffle their portfolio ahead of the second quarter window activities and reporting season. However, we continue to advise investors to target fundamentally sound companies and defensive stocks to protect their portfolios post-dividend adjustments.

Somewhere at the foreign exchange market, the naira slipped across segments as convergence continues as the fx market has continued to react to the latest development that has played out within the last few days.
The Naira depreciated by N10 or 1.32 percent w/w to N770/$1 from N760/$1 at the parallel market as the FX market and traders continued reacting to the forces of demand and supply.

Also, at the investors’ and exporters’ FX window, the Naira depreciated to another low against the United States’ dollar in reaction to the less restrictive fx policy by the apex bank as it tanked by N107.13 or 16.2 percent w/w to close at N770.17/$1 from N663.04/$1 in the last week. This comes as traders continue to position themselves in a bid to ascertain the fair value of the naira.

Also, following the latest development in the fx market in the review week, the Naira at the Forward Contracts Markets, weakened across all forward contracts against the dollar for another week.

Consequently, the dollar edged the naira by +9.48 percent, +5.61 percent, +5.51 percent, +5.88 percent and +11.15 percent w/w to close at N764.42/$1, N774.58/$1, N784.68/$1, N815.20/$1 and N878.74/$1 at all tenor contracts respectively.

Elsewhere, oil prices reversed the gains of last week, fueled by the bigger-than-expected rate hike by the Bank of England which has raised concerns about demand.

Resultantly, Brent crude, the global benchmark, traded at $73.63 per barrel at press time on Friday. Also, the Bonny Light crude price took a reversal by 1.55 percent or ($1.18) w/w, to close at $75.10 per barrel on Wednesday from $76.28 per barrel in the previous week.

As the foreign exchange market remains volatile in the near term, financial market analysts anticipate the market to adjust in line with the prevailing forces of demand and supply to ascertain the fair exchange price levels within the relative band, and, in the medium to long term.

However, they (experts) expect the naira to trade in a calm position against the greenback.