The local stock exchange exhibited resilience this past week, characterized by a touch of bullish optimism.
Investors continued their portfolio repositioning activities, with sectoral allocations coming into play ahead of the holidays.
This occurred as market participants awaited the upcoming release of the May Consumer Price Inflation report.
The positive market breadth supported a pattern reversal from the recent pullback, bolstered by the market’s low valuation. As a result, the All-Share Index increased by 0.71 percent week-on-week, closing at 99,925.29 points, reflecting strong investor interest in energy and financial stocks.
Similarly, market capitalisation experienced positive movement, recovering from the previous week’s downturn with a 0.71 percent increase over the week, climbing to N56.53 trillion. This translated into a gain of N397.74 billion, thereby enhancing investors’ wealth.
The market recorded 51 weekly gainers against 34 weekly decliners, 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 now stands at 33.64 percent. The equities market witnessed gains this week, with notable performers such as CUTIX (+28%), REGALINS (+24%), CHAMS (+23%), TOTAL (+21%), and FTN COCOA (+20%) leading the weekly gainers’ chart, driven by positive activities in these stocks, which propelled their price movements.
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. Sectoral performance was particularly strong, with the NGX-Oil & Gas and NGX-Banking indices leading the gainers with increases of 5.28 percent and 3.63 percent respectively. This was due to gains in some of the key stocks in these indices, as banks began to unveil their recapitalisation plans to meet the new capital requirements set by the Central Bank of Nigeria.
The stocks contributing to these gains included TOTAL, UNITYBNK, STERLINGNG, FIDELITYBNK, OANDO, and ZENITHBANK. Following closely were the NGX-Insurance, NGX-Consumer Goods, and NGX-Industrial Goods indices, which rose by 3.42 percent, 1.05 percent, and 0.27 percent respectively, thanks to positive price movements in REGALINS, CUTIX, GUINNESS, PRESCO, NIGERIAN BREWERIES, JULIUS BERGER, and NEM. Elsewhere, trading activities maintained a positive trajectory for the week, evidenced by an improvement in the total volume and value of weekly trades.
Consequently, the total traded volume surged by 54.63 percent week-on-week to 2.63 billion units, while the total weekly traded value sharply increased by 43.14 percent to N43.65 billion. However, the total number of trades for the week declined by 10.74 percent to 33,709 deals.
For this week, a mixed trend is expected, driven by profit-taking activities. 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 and the release of the May 2024 consumer price inflation report. 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.
Mixed sentiments persisted in the global stock market on the review week as investors assessed a deluge of information which could potentially influence future global monetary policy administration. As of the time of writing, US equities (DJIA: -0.4%; S&P 500: +1.6%) showed mixed results as investors weighed lower-than-expected inflation readings (CPI and PPI) for May against the Fed’s hawkish comments on interest rates.
Meanwhile, European equities (STOXX Europe: -1.4%; FTSE 100: -1.0%) are poised to end the week on a negative note following (1) growing concerns about political turmoil in France and (2) negative reactions to the US Fed’s latest monetary policy decision. In Asia, Japanese equities (Nikkei 225: +0.3%) rose as investors responded positively to the Bank of Japan’s decision to keep its benchmark interest rate unchanged while considering reducing its purchase of Japanese government bonds.
Conversely, Chinese equities (SSE: -0.6%) posted a weekly loss as the latest inflation data (May: +0.3% y/y) sparked worries about domestic demand. Elsewhere, the Emerging markets index (MSCI EM: +0.2%) closed positively following bullish sentiments in India (+0.3%) while the Frontier (MSCI FM: +0.0%) market index closed flat as gains in Vietnam (+1.2%) offset losses in Romania (-1.2%).
