Profit taking nudge equities into red zone

Chinwendu Obienyi

In two consecutive weeks of gains on the Nigerian Stock Exchange (NSE), investors retreated to taking profit in bellwether stocks, thereby driving the market to close in red at the end of trading sessions for the week.

With heavy losses recorded in three trading sessions, the NSE All Share Index (ASI) depreciated 0.72 per cent, week-on-week (w/w) to close the week at 23,871.33 points, while investors lost N91 billion, leaving market capitalisation at N12.441 trillion at the weekend.

Consequently, the Month-to-Date (MtD) return reduced to +3.7 per cent, as the Year-to-Date (YtD) loss increased to -11.1 per cent.

Performances across sectors were bearish as 4 of 6 indices  trended southward w/w.

The Industrial Goods Index led the losers with 2.2 per cent on the back of sustained sell pressures in CAP (-9.8 per cent) and Dangote Cement (-4.3 per cent). Trailing, the Insurance and AFR-ICT Indices shed 0.6 and 0.3 per cent respectively on account of losses in Custodian (-9.5 per cent), NEM (-7.4 per cent) and MTNN (-2.2 per cent). This is was as price declines in UBN (-8.6 per cent) and Access Bank (-2.3 per cent) dragged the Banking Index lower 0.03 per cent.

Conversely, the Consumer Goods Index led the gainers, up 2.3 per cent as investors took positions in Unilever (+21.0 per cent) and NASCON (+5.0 per cent) while buy interest in Eterna (+18.5 per cent), 11 Plc (+9.9 per cent) and Total (+6.7 per cent) buoyed performance in the Oil & Gas Index 1.6 per cent.

Meanwhile, a total turnover of 926.418 million shares worth N9.768 billion were traded in 20,910 deals this week by investors on the Exchange, in contrast to a total of 1.662 billion shares valued at N18.205 billion that exchanged hands last week in 28,791 deals.

This means that activity level weakened as the average volume and value of stocks traded fell by 44.4 and 46.4 per cent respectively.

The Financial Services industry (measured by volume) led the activity chart with 676.072 million shares valued at N5.053 billion traded in 10,753 deals; thus contributing 72.98 and 51.73 per cent to the total equity turnover volume and value respectively.

The Conglomerates followed with 71.117 million shares worth N399.502 million in 445 deals while the Consumer Goods recorded a turnover of 48.835 million shares worth N1.569 billion in 3,497 deals. Trading in the top three equities namely, FBN Holdings Plc, Guaranty Trust Bank and Zenith Bank Plc. (measured by volume) accounted for 335.075 million shares worth N4.061 billion in 4,885 deals, contributing 36.17 and 41.58 per cent to the total equity turnover volume and value respectively. Further analysis showed that 32 equities appreciated in price during the week, lower than 39 equities in the previous week as 28 equities depreciated in price, higher than 22 equities in the previous week, while 103 securities remained unchanged, higher than 102 equities recorded in the preceding week.

UACN topped the losers’ chart with 13.04 per cent to close at 0.80 kobo per share. CAP followed with a decline of 9.83 per cent to close at N20.65, ARBICO lost 9.73 per cent to close at N2.32, Custodian fell 9.52 per cent to close at N5.70, while Afromedia dropped 8.82 per cent to close at 0.31 kobo.

On the flipside, Microfinance Bank Plc topped the gainers’ chart with 50.85 per cent to close at N1.78 per share. Unilever was next with 20.95 per cent to close at N12.70, May and Baker increased by 20.9 per cent to close at N3.12, MCNICHOLS garnered 19.05 per cent to close at 0.50 kobo while Eterna notched up 18.52 per cent to close at N2.56.

Reacting to the performance of the market, analysts, who spoke with Daily Sun, said the market recorded its lowest weekly traded value and volume in 2020 due to the fact that there has been cautious dealings by both retail and institutional clients.

They, however, remained optimistic that the market would see some form of bargain hunting when transactions resume today.

Afrinvest, in their weekly assesment of the market, said, “In the coming week, we anticipate a mixed performance as investors react to more corporate earnings releases. Additionally, we expect to see some bargain hunting activities in early trades of this week”.

A stockbroker, who craved anonymity said, “While we believe the risk-off sentiment could have caused the recent sell-off in the market, we retain our stance that this may be one of the best periods to pick up some quality names with a medium to long term horizon”.

For their part, Cordros Capital, said, “in our opinion, risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions. Thus, we continue to advise investors to trade cautiously and seek trading opportunities in only fundamentally justified stocks.