Market reverses positive sentiment, underpinned by sell pressures in the banking and insurance space

Charles Abuede

The mood in the market was mildly negative on Wednesday, underpinned by sell pressures in the banking space. Retreating from Tuesday’s gains, the local bourse finished the day slightly lower, indicating a 0.04 per cent drop in the NSE-ASI to 38,706.13 points following sell-offs across GUARANTY (-1.8%), FBNH (-1.4%), and MANSARD (-5.1%).  Accordingly, the market year to date loss worsened to -3.9 per cent and market capitalisation reduced by N7.7 billion to N20.3 trillion.

Similarly, activity level tapered as the volume and value of traded units declined by 19.7 per cent and 36.4 per cent respectively to 177.4 million units and N2.7 billion. The most traded stocks by volume were GTBank (34.2m units), Zenith Bank (28.5m units) and UBA (17.7m units) while GTBank (N957.8m), Zenith Bank (₦572.1m) and Seplat Petroleum (N265.6m) led by value.

Across sectors front, the performance was mixed as 3 indicators lost, 1 gained and the Industrial goods and ICT indices closed flat. The Oil and Gas index rose 1.7 per cent on the back of gains in Oando Plc (+9.7%) and Seplat Petroleum (+0.9%). Conversely, the insurance, banking and consumer goods indices lost by 1.0 per cent, 0.4 per cent and 2 basis points respectively following sell-offs in AXA Mansard (-5.1%) and GTBank (-1.8%) and Vita Foam (-5.2%).

Investor sentiment, as measured by market breadth (advance/decline ratio), strengthened to 1.1x from the 0.6x recorded previously as 13 stocks advanced against 12 losers. Wapic (+10.0%), SFSREIT (+9.9%) and Oando Plc (+9.7%) were the top gainers while NCR (-9.7%), Neimeth Pharmaceuticals (-9.1%) and Vita Foam (-5.2%) were the top losers.

NSE 30

The NSE 30 Index marginally decreased by 0.05 per cent to close at 1,534.52 points as against 1,535.24 points as on the previous day. Market turnover closed with a traded volume of 123.56 million units. Zenith and Seplat were the only gainers, while Fidelity and Guaranty were the key losers.

FX market

In the foreign exchange market on Wednesday, the Naira traded flat at N485 to a dollar in the parallel market while it remained stable at N409.75 to the dollar at the investor and exporter window and also traded unchanged at the official CBN window at N379 per dollar. Most participants maintained bids between N394 and N412 per dollar.

Treasury Market

The NT-Bills secondary market closed on a flat note with the average yield across the curve remaining unchanged at 3.13 per cent. The average yields across short-term, medium-term, and long-term maturities closed at 0.61 per cent, 3.05 per cent, and 4.44 per cent, respectively. Moreover, at the Primary Market Auction held on Wednesday, the CBN offered NT-Bills worth N47.06 billion across 91-day (N1.50 billion), 182-day (N8.38 billion), and 364-day (N37.18 billion) tenors.

Elsewhere, the bears sustain their reign in the OMO bills market as the average yield across the curve decreased by 18 basis points to close at 6.95 per cent as against the last close of 7.13 per cent. Buying interest was seen across short-term, medium-term, and long-term maturities with average yields falling by 59 basis points, 2 basis points, and 12 basis points, respectively. Yields on 6 bills advanced with the 8-Jun-21 maturity bill registering the highest yield decrease of 178 basis points, while yields on 21 bills remained unchanged.

Bond market

Farther afield, the Bond market closed bearish, as the average bond yield across the curve cleared higher by 4 basis points to close at 5.97 per cent from 5.93 per cent on the previous day. Average yields across short tenor, medium tenor, and long tenor of the curve widened by 3 basis points, 2 basis points, and 14 basis points, respectively. The FGN Sukuk Bond 11-SEP-2021 was the best performer with a decline in yield of 3 basis points, while the 26-APR-2049 maturity bond was the worst performer with an increase in yield of 48 basis points.

In a related development, on Wednesday, the DMO released its FGN Bonds offer circular for March 2021 primary market auction (PMA), indicating its plans to offer FGN bond worth N150 billion through re-opening of 10-year (N50 billion), 15-year (N50 billion), and 25-year (N50 billion) tenors. The bond auction is scheduled on March 24, with settlement on March 26, 2021.