NGX gains N4.6trn as equities market rebounds by 2.86%

The Nigerian equities market added approximately N4.6 trillion in market value last week as the benchmark All-Share Index (ASI) rebounded by 2.86 per cent, although the recovery was driven largely by gains in selected heavyweight stocks, with more equities recording losses than gains.

The market capitalisation rose to N165.51 trillion from the previous week’s level, while the ASI advanced by 7,077.22 points to close at 254,299.49 points. The market’s year-to-date return consequently increased to 63.42 per cent. However, the positive performance of the benchmark index did not reflect the experience of the wider market, as 48 equities declined during the week, compared with 33 that appreciated, while 65 closed unchanged.

In its weekly financial markets review for October 30, Cowry Asset Management Limited said investor sentiment remained subdued despite the market’s positive performance, noting that the negative market breadth showed that the rally was not broad-based. The firm stated that “appreciation in a few heavyweight counters played a significant role in lifting the overall index.”

The divergence between the performance of the ASI and the number of declining stocks indicates that the market’s recovery was concentrated in selected equities rather than spread across a larger number of listed companies.

Trading activity also increased considerably during the week, with investors exchanging 7.619 billion shares valued at N637.826 billion in 192,138 deals, compared with 2.024 billion shares worth N110.773 billion in 173,113 deals recorded in the preceding week. The value of transactions increased by approximately 475.7 per cent, while the number of deals rose from 173,113 to 192,138, reflecting higher trading activity on the Exchange.

The increase in turnover was particularly pronounced on Tuesday, October 27, when investors traded 5.23 billion shares valued at N441.44 billion. This represented the highest daily volume and transaction value recorded during the five trading sessions. On Friday, October 30, the market recorded 997.56 million shares valued at N85.81 billion in 37,830 deals, while Thursday’s transactions stood at 654.14 million shares worth N57.25 billion.

The Financial Services Industry accounted for the largest share of trading activity, with 6.99 billion shares valued at N573.492 billion exchanged in 85,998 deals. This represented 91.75 per cent of total equity volume and 89.91 per cent of transaction value during the week. The Consumer Goods Industry followed with 164.65 million shares worth N7.201 billion traded in 20,297 deals, while the Services Industry recorded 93.28 million shares valued at N1.567 billion in 9,932 deals.

Trading in First Holdco Plc, Guaranty Trust Holding Company Plc and United Bank for Africa Plc also accounted for a substantial proportion of the week’s transactions. The three equities recorded a combined turnover of 6.096 billion shares worth N544.438 billion in 27,001 deals, representing 80.02 per cent of total equity volume and 85.36 per cent of transaction value.

The concentration of trading in the financial services sector and the three leading stocks underscored the significant influence of a limited number of equities on overall market activity. Sectoral performance was mixed, with the Industrial Goods Index emerging as the best-performing sector, rising by 14.58 per cent, largely on the back of gains in Dangote Cement Plc.

The Oil and Gas Index also appreciated by 0.82 per cent, while the Banking Index recorded the steepest decline, shedding 3.42 per cent. The Insurance Index fell by 2.13 per cent, Consumer Goods declined marginally by 0.02 per cent, while the NGX Main Board Index lost 0.11 per cent. The Industrial Goods Index rose from 10,646.68 points to 12,199.20 points, representing an increase of 1,552.52 points. Cowry Asset Management attributed the sector’s performance largely to the strong rally in Dangote Cement, which offset losses recorded by Austin Laz and Company Plc, Tripple Gee and Company Plc and BUA Cement Plc.

Dangote Cement was the market’s biggest gainer, appreciating by 27.81 per cent from N1,111 to N1,420 per share, an increase of N309. The stock’s performance also made it a major contributor to the rise in the Industrial Goods Index. Honeywell Flour Mills Plc followed on the gainers’ chart, rising by 25.98 per cent from N17.90 to N22.55 per share. UPDC Real Estate Investment Trust appreciated by 20.57 per cent from N17.50 to N21.10, while Sovereign Trust Insurance Plc gained 20.51 per cent to close at N2.35 from N1.95.

Other notable gainers included Eterna Plc, which rose by 9.90 per cent; Multi-Trex Integrated Foods Plc, up 9.09 per cent; Nigerian Exchange Group Plc, which appreciated by 8.07 per cent; and Nigerian Aviation Handling Company Plc, which gained eight per cent.

On the losing side, Caverton Offshore Support Group Plc led the decliners, shedding 25 per cent to close at N3.60 from N4.80 per share. Livestock Feeds Plc followed with a 21.99 per cent decline from N17.05 to N13.30, while Austin Laz and Company Plc lost 17.54 per cent to close at N2.35. First Holdco declined by 17.31 per cent from N144.10 to N119.15, while Guinea Insurance Plc shed 17.20 per cent to close at 77 kobo from 93 kobo.

The banking sector’s decline was largely driven by losses in First Holdco, Guaranty Trust Holding Company and Zenith Bank Plc, which outweighed gains recorded by Access Holdings and United Bank for Africa.

The NGX Banking Index fell by 86.01 points, from 2,515.47 to 2,429.46 points, extending its month-to-date decline to 10.42 per cent. Despite the weekly setback, the index maintained a year-to-date gain of 60.27 per cent.

Cowry Asset Management said the banking sector’s performance pointed to renewed profit-taking and cautious positioning in some of the market’s major banking stocks, despite pockets of buying interest across the sector. The Insurance Index also weakened by 2.13 per cent, reflecting losses in Guinea Insurance, Wapic Insurance Plc and AIICO Insurance Plc, which outweighed gains in Sovereign Trust Insurance and Mutual Benefits Assurance Plc.

The Consumer Goods Index recorded a marginal decline of 0.02 per cent, as losses in Champion Breweries Plc, Cadbury Nigeria Plc and Nigerian Breweries Plc offset gains in Honeywell Flour Mills, PZ Cussons Nigeria Plc and Multi-Trex Integrated Foods.

Despite the negative market breadth and weakness in some key sectors, Cowry Asset Management maintained a cautiously positive outlook for the equities market in the coming week, citing renewed buying interest in selected large-cap stocks and improved trading activity.

“We expect the equities market to sustain a cautiously positive outlook in the coming week, supported by renewed buying interest in selected large-cap stocks and improved trading activity. However, the negative market breadth and persistent weakness across key sectors suggest underlying investor caution, which could trigger intermittent profit-taking.”

The firm, warned that the negative market breadth and persistent weakness across key sectors could trigger intermittent profit-taking, indicating that the market’s performance may remain selective. It said investors were likely to focus on fundamentally sound stocks and opportunities for capital appreciation, while the concentration of gains in selected equities suggests that the broader market may not necessarily move in the same direction as the benchmark index.