Late rallies from Zenith Bank, Transcorp, Dangote Cement and Sterling Bank helped Nigeria’s equities market turnover to close positive Friday as volume moved up by 26.03 percent as against 45.88 percent downtick recorded in the previous session.
However, the late rallies could not pull the equities market from the bear zone as of week ended July 7, 2017 after suffering major losses in the first three three trading sessions in the week.
Zenith, Transcorp and Sterling Bank were the most active to boost market turnover, while Zenith and Dangote Cement raised market value list.
The NSE ASI appreciated by +0.32% to close at 32,459.17 basis points as against +0.16% appreciation recorded previously. Its Year-to-Date (YTD) returns currently stands at +20.78%.
Market breadth closed positive as TRANSCORP led 28 Gainers as against 17 Losers topped by CONOIL at the end of today’s session- an improved performance when compared with previous outlook. Champion led the list of active stocks that recorded impressive volume spike at the end of today’s session.
On a general note, sentiment was bearish in the first week of the month as the market sustained losses on the first three days before staging a mild rebound in the last two sessions.
Consequently, the benchmark all-share index declined 2.0% week-on-week to close at 32, 459.17 points, paring YTD gain to 20.8 percent, while market capitalization declined N265.0 billion to berth at N11.2 trillion.
The negative performance during the week was against the backdrop of a rout in banking stocks and profit-taking across consumer and oil & gas stocks. Similarly, activity level weakened relative to previous week as average volume and value of stocks traded daily fell 45.7 percent and 35.6 percent to 212.2 million and N2.5 billion.
Sector performance mirrored the broader index as three of five indices closed in the red this week. The insurance and industrial goods indices were the only advancers, up 1.1 percent and 0.2 percent week-on-week respectively, following gains in CONTINSURE (+9.2%) and CAP (+6.3%).
On the flipside, the consumer goods index declined the most, down 4.0 percent week-on-week attributable to bearish sentiment in FLOURMILL (-15.6%), which delivered a negative earnings surprise, as well as profit taking in NIGERIAN BREWERIES (-4.3%) and UNILEVER (-7.8%).
Flourmill’s FY:2017 result was released on Thursday with the miller recording a 53.1 percent increase in revenue while profit after tax (PAT) declined 38.7 percent due to high base effect of UNICEM sale in FY:2016 as well as unexpected increase in 4th Quarter cost of sales and OPEX margins.
Similarly, the banking index shed 2.2 percent, as investors reacted negatively to Etisalat Nigeria credit default, culminating in losses in UBA (-3.0%), ACCESS (-1.8%) and ZENITH (-1.4%). The oil & gas index weakened 1.8 percent week-on-week, pressured by selloffs in MOBIL (-5.4%) and TOTAL (-5.0%).
Investor sentiment measured by market breadth moderated from 1.4x last week to 0.3x this week as 16 stocks advanced against 48, which declined.
Top gainers include CUTIX (+10.0%), CONTINSURE (+9.2%) and HONYFLOUR (+8.0%) while MAYBAKER (-25.8%), NEIMETH (-24.4%) and CONOIL (-18.5%) led the laggards.
With the euphoria, which greeted the opening of Investors’ and Exporters’ window drying up, Afrinvest analysts expect performance to be more driven by earnings fundamentals in the near term.
“Investors will be looking at H1:2017 earnings results due to be released in July/August for clues on how solid companies’ fundamentals are but we expect some early-bird investors to start taking positions ahead of the releases. Hence, we expect the bourse to recoup losses in trading sessions next week, barring negative earnings surprises,” they noted.
