Monday, 29 April 2013

Stock Market Close Firmer Despite Profit-taking

0502-NSE-Building-Lagos.jpg - 0502-NSE-Building-Lagos.jpgThe Nigerian equities market reversed the prior week's negative performance to close last week on a positive note, helped by traders’ positive response to the first quarter earnings results released by the banks. However, the performance during the week was not spectacular as profit-taking activity persisted.

The previous week, the much-awaited rally in the earnings season did not materialise as the market closed the week in red despite stronger-than-expected results released by some banks.
Trading resumed on a strong note last Monday as stock prices returned northward, sustaining the gain momentum that started at the end of the prior trading week. The positive momentum was driven by speculative investors and securities traders’ positive response to the first quarter earnings results released by the banks. The impressive earnings results rekindled investors’ purchase interests for the banking stocks.

Stock prices however fell on Tuesday, snapping the gains of previous trading days as investors’ buy actions were not enough to sustain the momentum. At the close of business that day, only the banking index witnessed a slight gain because investors were still positively responding to the impressive first quarter earnings results.

 The market returned northward on Wednesday as trading activities increased by 16 per cent in relation to volume as investors bought 365.823 million shares worth N4.615 billion in 5,476 deals compared to 316.105 million units of shares worth N4.030 billion exchanged in N5.247 deals on Tuesday.

At the close of trading last Thursday, stock prices depreciation, halving the gains of previous trading day following investors’ negative reaction to the first quarter earnings release of Unilever Plc.

Friday was not different as stock prices again depreciated, wiping out the gains of previous trading days as investors and securities traders remain consistent with the profit taking activities.
Despite the unstable situation in the market, the NSE All-Share Index or ASI rose by 165.11 basis points or 0.50 per cent to close on Friday at 33,159.08 while the market capitalisation of the listed equities on the mainboard advanced by 0.52 per cent to close at N10.602 trillion. Also, the NSE 30 Index appreciated by 8.72 points or 0.55 per cent to close at 1,583.57 while NSE Banking Index inched up by 8.65 points or 2.28 per cent to close at 388.09.

However, other NSE sectoral indices that depreciated during the week include; NSE Consumer Goods, NSE Insurance, NSE Oil and Gas, NSE-Lotus II and NSE Industrial Goods by 1.20 per cent, 5.53 per cent, 6.35 per cent, 1.41 per cent and 2.03 per cent respectively. Meanwhile, the newly launched NSE-ASeM Index closed flat.

Market Turnover
Meanwhile, a review of trading numbers for the week under review showed that turnover of 1.758 billion shares worth of N17.898 billion in 23,958 deals were transacted during the week by investors on the floor of the exchange in contrast to a total of 2.114 billion shares valued at N26.678 billion that exchanged hands the previous week in 27,624 deals.

 At the close of trading activities for the week, the Financial Services sector (measured by turnover volume) came top and accounted for 1.443 billion shares valued at N10.502 billion exchanged hands by investors in 14,600 deals. Consumer Goods sector followed in the activity chart with 69.691 million shares valued at N5.130 billion traded in 4,100 deals.
Similarly, the banking subsector of the Financial Services sector was the most active during the week (measured by turnover volume) with 1.061 billion shares worth N8.432 billion traded in 10,546 deals. The volume of shares sold in the banking subsector was largely driven by activities in the shares of Unity Bank Plc, Zenith Bank Plc and Access Bank Plc. Trading in the shares of the three banks accounted for 587.557 million shares worth N4.230 billion exchanged by investors in 3,163 deals contributing 33.43 per cent to the total equity turnover volume recorded during the week.

In the course of the week, 14,905 units of NewGold Exchange Traded Funds (ETFs) valued at N32.677 million were executed in 50 deals compared with a total of 6,021 units valued at N12.944 million transacted last week in 21 deals.

 Also, 1,420 units of FGN bonds valued at N173,253.00 were traded during the week in eight deals in contrast to 4,140 units valued at N4.471 million transacted last week in 30 deals.

Price Change Summary

 The price movement chart of the Nigerian Stock Exchange (NSE) revealed that 34 equities appreciated in prices during the week higher than 28 equities of the preceding week. 46 equities depreciated in price lower than 49 equities of the preceding week, while 116 equities remained constant lower than one 119 equities of the preceding week. The to 10 gainers during the week were: CAP Plc (N1.70), Guaranty Trust Bank Plc (N1.34), Stanbic IBTC Holdings Plc (N1.10), Zenith Bank Plc (80 kobo), Learn Africa Plc (60 kobo), Paints and Coatings Manufactures Plc (41 kobo), Wema Bank Plc (12 kobo), Evans Medical Plc (8 kobo), ABC Transport Plc (7 kobo) and Ikeja Hotel Plc (6 kobo). On the other hand, the top 10 losers were: MRS Oil Nigeria Plc (N4.25), Cement Company of Northern Nigeria Plc (N2.50), Berger Paints Plc (N1.50), Livestock Feeds Plc (47 kobo), Costain Plc (46 kobo), Deap Capital Management & Trust Plc (34 kobo),WAPIC Insurance Plc (32 kobo), Cutix Plc (25 kobo), Royal Exchange Plc (14 kobo) and Neimeth International Pharmaceuticals Plc (13 kobo).


 Looking ahead, analysts at BGL Limited said they were optimistic that the market would witness positive upturn as companies released impressive results to rekindle the buy interests of speculative investors queuing to benefit from post earnings surprises.

“During the trading week, the market witnessed lingering depression which can be largely attributed to the profiteering activities of the speculative investors as they realise gains on winning stocks. We noted that high capped stocks in the financial services and consumer goods sectors suffered the most hit. These categories of stocks earlier witnessed significant price rallies in the early period of the year. The volatility moderated on Friday as the weekend effects weigh on the market.
“We however expect the market to open this week on a positive note as investors regain confidence and are repositioned to benefit from the bounties of the first quarter earnings season. Earnings releases of listed companies especially the banks have been impressive; we do not expect the earnings results of the remaining banks to be totally different.”

On their part, analysts at FSDH Merchant Bank Limited believed investors have factored expected earnings into current market price of companies releasing their results, hence the less-than-impressive performance of the market.

"The market did not show much enthusiasm to the release of corporate actions and some impressive results that have been released in recent times. We believe investors had factored the expected earnings into the pricing of these stocks. Hence, the eventual release of the result could not spark off the much desired change. As more result trickle into the market in subsequent weeks, we are most likely to see a haphazard trading pattern.
"We urge investors to stick to stocks with good fundamentals. Investors are advised to consider investment opportunities in the under listed stocks, as they have good fundamentals that can generate good returns in the medium to long- term, "said FSDH.
Source: ThisDayLive

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