Amid gradual fading off of full year earnings season, which before now had stimulated buy-activity at the Nigerian bourse, equity investors may have chosen the route of “caution” evidenced in their moderate bargain activities.
Cautious mood results from analysts’ expectation of a mixture of bargain hunting and profit-taking on the back of recent gains.
The outbreak of released full year results had helped the stock market as investors scrambled for the shares of companies that turned up good performances and declared good dividends.
With no major positive news within the market after Seplat’s listing, investors buy mood is further dampened by recent S&P negative outlook on Nigeria, which most market analysts believe does not help confidence –particularly by foreign investors who are major buyers of Nigerian equities.
Riding on recent gains, most retail investors are taking profit from their stocks preparatory to Easter season spending.
The stock market closed last week with a year-to-date (ytd) return in negative of 5.43%. The market mood reflected on the summary of equities price changes which showed that 33 equities appreciated in prices while 36 equities depreciated in prices, while 129 equities remained unchanged.
Last week at the bourse, a turnover of 1.642 billion shares worth N23.163 billion in 21,620 deals were recorded in contrast to a total of 1.937 billion shares valued at N21.264 billion that exchanged hands the preceding week in 21,641 deals.
The financial services industry (measured by volume) led the activity chart with 1.375 billion shares valued at N14.241 billion traded in 12,596 deals; thus contributing 83.73% and 61.48% to the total equity turnover volume and value respectively.
The conglomerates industry followed with a turnover of 108.548 million shares worth N597.556 million in 1,346 deals. The third place was occupied by the Consumer Goods Industry with 60.379 million shares worth N5.526 billion in 3,407 deals.
Trading in the Top Three Equities Namely- Zenith International Bank Plc, Access Bank Plc and Guaranty Trust Bank Plc (measured by volume) accounted for 504.129 million shares worth N9.443 billion in 4,087 deals, contributing 30.70% and 40.77% to the total equity turnover volume and value respectively.
Taking a cue from these factors, market analysts at Partnership Investment Company plc they anticipate some level of profit talking “as investors are likely to maintain the defensive posture, trading cautiously to minimize loss,” adding also that equities in the Consumer Goods, Conglomerates and Industrial Goods provide good opportunities at this time.”
Before now, these analysts observed volatility in the market as investors sustained moderate bargain optimism, adding that “investors were more defensive, tilting towards value stocks, and less of speculation. Large and medium cap stocks were the most patronised.”
Stock market analysts at UBA Capital said that “early bird positions ahead of the of 2014Q1 earnings season amidst lower yield environment should support our expectation of modest gain in the week. We are relatively bullish on Financials, given compelling earnings outlook and relatively cheap valuations”.
Iheanyi Nwachukwu
