After the recent release of Zenith Bank plc and GTBank plc’s results that enticed investors last week, sentiments favour the stock market closing positive this week.
As stock buyers at the Nigerian Stock Exchange (NSE) raised their bet in banking stocks last week, it pushed the month-to-date (MtD) returns of the NSE Banking Index high at 9.79 percent and year-to-date (Ytd) return at 2.39 percent against the entire market negative return of 10.41 percent Ytd.
The duo of GTBank and Zenith Bank opened the window of full-year 2014 earnings season with their impressive results that surpassed many analysts’ consensus forecasts; a development that helped to douse investors earlier concerns over bank’s possible full-year numbers.
Nigerian stock market rose by 3.14 percent or N316 billion in value terms. “The bullish trend in the market last week was largely driven by expectations and reactions to impressive FY’14 results of banks released during the week,” said research analysts at Lagos-based United Capital plc.
As market sentiments remain high that more banks will this week berth with improved earnings, analysts see the stocks market buoying recent gains, driven by bank stocks.
Already, the equities market opened this week with a value increase of N50 billion as investors positioned further in value stocks despite concerns that the impact of the fallout from the decline in oil prices will likely linger a bit and impact listed companies earnings.
“We expect further appreciation in banking equities to drive the overall market to the green region,” said analysts at investment firm, Cowry Asset Management Limited.
Also, market analysts at Access Bank plc in their most recent outlook anticipate current momentum to be sustained “as NSE banking index continues to appreciate.”
Despite choppy trade witnessed at the nation’s bourse last week, the NSE All Share Index (ASI) closed high at 31,049.37 points from 30,103.81 points at the beginning of trade last week, indicating week-on-week (WoW) increase of 3.14 percent.
Similarly, all indices rose with exception of the NSE Insurance Index, NSE Oil/Gas Index and NSE Lotus II Index that closed lower by 0.12 percent, 2 percent, and 1.75 percent, respectively. However, the NSE ASeM Index closed flat.
As investors returned to Customs Street this week, analysts at United Capital plc in their outlook, noted that with the impressive results by heavyweights in the banking sector which led to a rally in the market towards the end of last week, “we therefore expect the positive reaction to be sustained at week open coupled with anticipation of more good results supported by attractive valuation.”
Though, to United Capital analysts, the stock market might see some level of profit-taking in the market by midweek. “This said, we expect the market to close the week positive, though at a moderated pace,” they said.
Iheanyi Nwachukwu
