Onome Amuge
The Nigerian equities market staged a rebound for the week, bouncing back from a previous downtrend as the All-Share Index (ASI), the benchmark index for the Nigerian Exchange (NGX), recorded a 0.66 percent week-on-week gain, closing at 105,660.64 points.
The bullish momentum in the Nigerian equities market was primarily driven by a flurry of corporate activities in the banking sector, as leading financial institutions reported robust earnings for the fiscal year 2024, along with generous dividend declarations, instilling investor confidence and fueling market sentiment.
Furthermore, the quarter-end portfolio rebalancing and window-dressing practices that typically occur as investors adjust their portfolios and adjust to market conditions helped boost the bullish mood, resulting in increased investor confidence.
Buying pressure exerted its dominance in the Nigerian equities market during the week, driving the total market capitalisation to N66.26 trillion, up by N437.5 billion.
This bullish activity dominated three out of five trading sessions, contributing to the year-to-date (YTD) return for the ASI, which soared 2.66 percent, indicating a noticeable shift in investor sentiment towards renewed optimism.
The equities market saw an increase in participation, as reflected in the positive market breadth of 1.19 times, with 43 stocks in the positive territory, outweighing the 36 decliners. This bullish trend was further supported by a 7.48 percent rise in trading activity, with the total number of transactions reaching 61,309 deals.
The volume of shares traded witnessed a 159.2 percent increase to 7.52 billion units, while the total value of traded equities rose 730.04 percent to N398.95 billion, underlining a significant rise in market activity.
The heightened trading volume and value were largely driven by increased institutional participation, coupled with investors’ efforts to reposition their portfolios in anticipation of dividend payouts.
Market sentiment was bullish across most sectors, with four of the six major indices registering gains. The NGX Banking Index emerged as the standout performer, advancing 4.28 percent on a week-on-week basis, as investors displayed a marked interest in banking stocks, including GTCO, FCMB, FIDELITYBNK, and FIRSTHOLDCO, following their strong financial results.
The NGX Insurance Index displayed strong growth, trailing closely behind the NGX Banking Index, with a 3.21 percent uptick. This was accompanied by gains in the NGX Consumer Goods and NGX Industrial indices, rising by 0.12 percent and 0.01 percent respectively, as shares of MBENEFIT, SUNUASSURANCE, CHAMPION, IKEJAHOTEL, and UPDC registered price gains.
The NGX Oil & Gas Index bucked the bullish trend, retreating by 1.63 percent for the week, largely due to sell-offs in key stocks such as ETERNA, OANDO, and ARADEL, as market participants adopted a cautious stance amid fluctuating global oil prices, eroding investor sentiment in the sector.
Meanwhile, the NGX Commodity Index also registered a decline, contracting by 0.76 percent, as investors opted to cash in on recent gains in the sector.
While the overall market exhibited bullish tendencies, certain stocks emerged as notable gainers for the week, with MBENEFIT leading the pack, registering a 56.7 percent increase.
Other significant movers included SUNU Assurance, which surged by 33.3 percent, followed by ABBEYBDS, which recorded a 31.4 percent growth, while ROYALEX and ETRANZACT also posted 31.3 percent and 19.8 percent gains respectively.
On the flipside, AFRIPRUD bore the brunt of the sell-offs, recording a 60.5 percent decline, earning the title of the worst-performing stock of the week. Similarly, CWG faced a significant drop of 11.1 percent, followed by JOHNHOLT and UHOMREIT, which both experienced double-digit losses at 10.0 percent and 9.9 percent respectively, with UCAP also taking a hit, shedding 9.8 percent for the week.
As the market turns its attention to the earnings season, analysts at Cowry Research anticipate a continuation of the bullish trend, fueled by the anticipation of attractive dividend announcements from blue-chip companies.
With market participants seeking to capitalise on lucrative dividend payouts, the analysts predict that blue-chip stocks, which typically offer more stable returns and reliable earnings, will remain in high demand, paving the way for further growth and sustained investor interest in the Nigerian equities market.
Cowry Research however warned that portfolio rebalancing activities and profit-taking could introduce some volatility as investors assess corporate earnings results and macroeconomic data.
“Against this backdrop, we continue to advise investors to focus on fundamentally strong stocks with consistent earnings growth and resilient business models, ensuring sustainable long-term value creation,” the analysts stated.
