Published
1 year agoon
Just two weeks into the new year, the Nigerian stock market is already leading the global equities space in terms of returns as it ended another week bullish with significant uptick.
At the close of the week two of the year 2024, the local bourse advanced by 4.24% which translated into N1.848 trillion profit for investors in the market.
Despite various economic headwinds in the country, the Nigerian stock market has since proven defiant to the economic volatilities to remain in the green territory and deliver impressive returns.
For instance, the NGX index soared by a stellar 45.9% in 2023 to beat worsening inflation in the year and emerged one of global best-performing stock markets. It further commenced 2024 with an impressive return of 6.54% (N2.676 trillion) in the first week of the year alone.
As the market again closed bullish this week, the NGX All-Share Index (ASI) gained 3,378.3 points to close at 83,042.96 basis points while market capitalization soared by N1.848 trillion to close higher at N45.442 trillion.
The impetus
The weekly gain turned out to be a collective outcome of upward price movements across various sectors of the market.
Sectoral analysis showed that consumer goods index rose by +9.6%, followed by insurance index at +7.6%, while banking and industrial goods sectors followed suit with +5.1% and +4.8% respectively. On the flip side, Oil and Gas closed in red as the sole loser with -1.6% decline.
The domestic bourse extended its bullish run for a second week as investors continued to cherry-pick stocks ahead of 2023 Full Year earnings releases.
Although, profit-taking activities briefly tempered the upbeat trend midweek, strong rallies in the Consumer Goods, Banking and Industrial Goods stocks propelled the market’s pricing gauge to a historic high, with the All-Share Index remaining above the 80,000-points mark breached earlier in the week, closing at 83,042.96 points.
In terms of major drivers, notable increase in investors’ appetite for the stocks of BUA Foods (+15.5%), Dangote Cement (+7.7%), Transcorp (+17.9%) and GTCO (+8.9%), resulted in the 4.2% weekly gain and elevated the Year-to-Date return to +11.1%.
Trade distribution
During the week under review, the trading activity level remained positive, as trading volume and value increased by 72.3% and 112.7% week-on-week, respectively.
Specifically, investors traded a total turnover of 5.719 billion shares worth N88.828 billion in 80,064 deals during the week, in contrast to a total of 3.320 billion shares valued at N41.755 billion that exchanged hands last week in 46,994 deals.
In terms of highest volume by sector, the Financial Services Industry led the activity chart with 3.873 billion shares valued at N53.364 billion traded in 39,913 deals; thus contributing 67.72% and 60.08% to the total equity turnover volume and value respectively.
The Conglomerates Industry followed with 725.490 million shares worth N9.886 billion in 7,658 deals while the third place was the Oil and Gas Industry, with a turnover of 223.240 million shares worth N2.690 billion in 4,464 deals.
Meanwhile, trading in the top three equities namely Transnational Corporation Plc, FCMB Group Plc and Fidelity Bank Plc, measured by volume, accounted for 1.380 billion shares worth N17.741 billion in 12,442 deals, contributing 24.12% and 19.97% to the total equity turnover volume and value respectively.
Out of the 155 listed equities at the NGX, 75 appreciated in prices during the week, lower than 88 that recorded gains in the previous week, while 23 other equities depreciated in prices, higher than 17 decliners last week. Record also showed that 57 equities remained unchanged, higher than 50 that closed flat last week.
On the ETP board of the NGX, investors transacted a total of 75,890 units valued at N33.486 million in 334 deals compared with a total of 391,760 units valued at N8.450 million transacted last week in 140 deals.
Investors’ interests in the fixed income segment of the market also led to trading of 75,890 bond units valued at N33.486 million in 334 deals as against a total of 391,760 units valued at N8.450 million that exchanged hands in 140 deals last week.
What experts are saying:
Experts’ opinions are indicative of sustained rally in the market, affirming that the bulls are not ready to yield to bear pressure anytime soon.
Analysts at Cordros Research predict that in the short term, the market performance is expected to be dominated by the bulls, as positioning for 2023 FY earnings releases and accompanying dividends declarations should outweigh profit-taking activities.
“Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro environment remains a significant headwind for corporate earnings,” they said is a note available to BUSINESS METRICS.
According Cowry Asset analysts, the equities market promises a nuanced market environment, appearing poised for a potential pullback in the short term.
They said: “Expectations include mixed sentiment, profit-taking, and the persistence of bargain hunters amidst anticipation of unaudited Q4 2023 financial results.
“Additionally, market participants will brace for volatility in light of the expected December Consumer Price Index (CPI) release and the impending Monetary Policy Committee (MPC) meeting in January.
“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, while taking advantage of the price corrections in the market.”