Sell-offs in Zenith, GTBank, Wapco drags market into red on the back of rising inflation

Charles Abuede

The local equities market still in the bear territory as it could not sustain the positive gain of Wednesday due to the recently released inflation rate of 18.17 per cent by the National Bureau of Statistics (NBS) on Thursday. Consequently, the local bourse was dragged into the south due to sell-offs in Wapco Plc (-3.0%), Zenith Bank (-0.9%) and GTBank (-0.2%) as the benchmark index fell 0.17 per cent to 38,571.89 points. As a result, the market year to day loss increased to -4.2 per cent while market capitalisation declined to settle at N20.18 trillion from N20.22 trillion while market investors made by N33.6 billion.

Also, the level of trading activity was varied on Thursday as total volume traded rose 14.9 per cent to 391.4 million units while the total value of trade exchanged declined 21.9 per cent to N1.8 billion. The most traded stocks by volume were Fidelity Bank (46.1m units), Access Bank (36.9m units), and Mutual Benefit assurance (27.7m units) while GTBank (N352.4m), Access Bank (N297.7m), and First Bank Holding (N197.7m) led by value.

Similarly, there was a mixed performance across the sectoral front as 2 sectors advanced, 3 declined, and 1 closed flat. The oil & gas and consumer goods indices gained 0.1 per cent apiece due to price appreciation in Ardova Plc (+1.1%), Guinness Nigeria Plc (+10.0%) and Dangote Sugar (+1.8%). Conversely, the Insurance index led losers with a 2.8 per cent decline on the back of profit-taking in AXA Mansard (-7.4%) and Wapic Plc (-4.4%). The banking and industrial goods indices also declined by 97 basis points and 18 basis points respectively due to price declines in Zenith Bank (-0.9%), GTBank (-0.2%) and Wapco Plc (-3.1%). However, the ICT index closed flat.

Elsewhere in the market, the investor sentiment, as measured by market breadth closed flat at 0.6x (same as the previous trading session) as 16 stocks advanced against 27 decliners. Guinness Nigeria Plc (+10.0%), Morison Industries (+9.3%) and FTN Cocoa Processors (+9.3%) were the top gainers while UAC-Properties (-10.0%), PZ Cussons (-9.8%), and Studio Press (-3.5%) were the top decliners.

NSE 30

The NSE 30 Index decreased by 0.20 per cent to close at 1,531.72 points as against 1,534.86 points as on the previous day. Market turnover closed with a traded volume of 159.95 million units. Guinness Nigeria Plc and FCMB were the key gainers, while Union Bank and Unilever Plc were the key losers.

FX market

At the foreign exchange market, the naira closed at N482 to a dollar in the parallel market while the CBN official exchange rate stayed flat to close at N379 per dollar. At the I&E FX market, Naira remained stable at N410.50 as most participants maintained bids between N392 and N422 per dollar.

Treasury Bills

In the NT-Bills secondary market on Thursday, the market closed on a positive note with average yield across the curve decreasing by 7 basis points to close at 4.37 per cent from 4.44 per cent on the previous day. The average yields across medium-term and long-term maturities declined by 3 basis points and 13 basis points, respectively. However, the average yield across short-term maturities closed flat at 2.41 per cent.

Moreover, the CBN held its scheduled Primary Market Auction on April 14, selling NT-Bills worth N232.57 billion across the 91-day (N12.46 billion), 182-day (N87.99 billion), and 364-day (N132.12 billion) tenors. The stop rates for the 91-day and 182-day remained unchanged at 2 per cent and 3.50 per cent, respectively. However, the stop rate for 364-day tenor cleared higher at 9 per cent (+100 basis points). The auction was undersubscribed by 55 per cent, with bid-to-cover ratios settling at 1.00x (91-day), 0.31x (182-day), and 0.44x (364-day).

In the OMO bills market, the average yield across the curve increased by 11 basis points to close at 7.02 per cent as against the last close of 6.91 per cent. Selling pressure was seen across medium-term and long-term maturities with average yields expanding by 14 basis points and 13 basis points, respectively. However, the average yields on short-term maturities closed flat at 3.77 per cent.

Bond market

The FGN bonds secondary market closed on a positive note Thursday, as the average bond yield across the curve cleared lower by 17 basis points to close at 7.94 per cent from 8.11 per cent on the previous day. Average yields across the short tenor of the curve declined by 32 basis points, while the average yields across medium tenor and long tenor of the curve widened by 38 basis points and 20 basis points, respectively.

The FGNSB 10-APR-2022 bond was the best performer with a decline in yield of 108 basis points, while the 26-APR-2049 maturity bond was the worst performer with an increase in yield of 70 basis points.