The Nigerian Exchange, or NGX, rose as investors’ wealth increased by around N398 billion as a result of value seekers’ and alpha seekers’ improved positioning in the local market last week.
Many market analysts and stockbrokers believe that the local stock exchange showed resiliency this past week, marked by a hint of bullish confidence. Cowry Asset Management Limited emailed clients to report that investors kept adjusting their portfolios, with sectoral allocations coming into play ahead of the holidays.
Stockbrokers said that the cheap valuation of the market helped to support a pattern reversal from the previous downturn, which was backed by the positive market breadth.
Some market observers noted that recent price depreciation has opened up new opportunities for bargain hunters to join the Nigerian Exchange, but they cautioned that this would last longer because of the central bank auctions’ moderation of rates—spot rates were gradually lowered at the long end of the curve.
Taking into account the dynamics of the market, investors who were looking for a high return and had a modest tolerance for risk increased their shareholdings by investing in cheap stocks.
Strong investor interest in energy and banking equities was evident in the All-Share Index, which rose by 0.71% week over week and closed at 99,925.29 points, according to data from the Nigerian Exchange.
The market recorded 51 weekly gainers against 34 weekly decliners, according to Cowry Asset Limited, buoyed by bullish sentiment that firmly established the bulls’ dominance on the benchmark index in three out of the four trading sessions this week.
Consequently, the year-to-date return advanced to 33.64%, closely tracking the annual inflation rate of 33.95%. Top performers for the week include CUTIX (+28%), REGALINS (+24%), CHAMS (+23%), TOTAL (+21%), and FTNCOCOA (+20%).
Conversely, negative investor sentiment led to sell-offs in DAARCOMM (-18%), CILEASING (-15%), CUSTODIAN (-11%), ETI (-11%), and NASCON (-10%), positioning these stocks as the top losers for the week, Cowry Asset said in its market update.
Stockbrokers stated that sectoral performance was particularly strong, with the Oil & Gas and Banking indices leading the gainers with increases of 5.28% and 3.63%, respectively. The stocks contributing to these gains included TOTAL, UNITYBNK, STERLINGNG, FIDELITYBNK, OANDO, and ZENITHBANK.
Following closely were the Insurance, Consumer Goods, and Industrial Goods indices, which rose by 3.42%, 1.05%, and 0.27%, respectively, thanks to positive price movements in REGALINS, CUTIX, GUINNESS, PRESCO, NIGERIAN BREWERIES, JULIUS BERGER, and NEM.
The total traded volume surged by 54.63% week-on-week to 2.63 billion units, while the total weekly traded value sharply increased by 43.14% to N43.65 billion. However, the total number of trades for the week declined by 10.74% to 33,709 deals.
Overall, the equities market capitalization of the Nigerian Exchange increased from N397.74 billion to N56.53 trillion. “Looking ahead to the next week, a mixed trend is expected, driven by profit-taking activities,” Cowry Asset said.
Stockbrokers and market analysts added that sector rotation and portfolio rebalancing on the exchange are expected to continue in anticipation of the second half of the year’s window-dressing activities. As trading volume patterns continue to fluctuate, suggesting buying interest in some sectors and profit-taking in others amidst a wait-and-see attitude among market players, investors are advised to trade in stocks of companies with sound fundamentals.
