Nigerian Stock Exchange
By Helen Oji
Index depreciate by 0.42%, as analysts urge caution
As investors await the outcome of the next Monetary Policy Committee
(MPC) meeting, amid fear of
The development caused the NSE All-share index and market capitalisation to depreciate by 0.42 per cent and 0.38 per cent to close the week at 41,001.99 and N21.449 trillion, respectively.
Similarly, all other indices finished lower with the exception of NSE MERI Growth, which appreciated by 0.12 per cent while the NSE ASeM and NSE Growth Indices closed flat.
Analysts linked the persistent profit-taking last week to fear that was heightened by the latest FGN Bonds which reopened on adjusted and juicier rates for long-tenured bonds.
According to them, this signals the possibility of a change in monetary policy, depending on the voting pattern of MPC members during their first meeting for the year, holding this week.
The Chief Research Officer, Investdata Consulting, Ambrose Omodion, noted that aside from the mid-week session, the market posted marginal losses during the other trading days.
“Looking at the rate and pattern of profit-booking across the market, one can safely conclude that investors in the market are undecided and playing cautiously, undecided about the next direction of the NSE’s composite All-Share index
“The rising inflation rate has been a threat to the prevailing low interest rates regime which requires the urgent attention of the fiscal and monetary authorities, even as the economy awaits policies that will drive recovery and growth this year.
“Nevertheless, given the trading pattern and sharp uptrend that brought the key performance index to this current level, we once again, suggest that investors should take profit in positions they have made between 15-30 per cent so far and wait to re-enter later. ”
Analysts at Codros Capital said: “In the week ahead, we expect investors’ attention to be centred on the outcome of the first MPC meeting of the year. We believe consensus expectation for a HOLD decision if confirmed will engender positive market performance as investors cherry-pick stocks with attractive dividend yields amid negative real returns in the fixed income market.
“However, we advise investors to take positions in only fundamentally-justified stocks as the fragility of the macroeconomic environment remains a significant headwind for corporate earnings.” A breakdown of market activities for the week showed that renewed profit-taking in some high value stocks, halted a five-day rally on the NSE, as market capitalisation fell by N39 billion.
At the close of transactions Monday, the ASI shed 93.76 absolute points or 0.23 per cent loss to close at 41,082.38 points. Accordingly, investors lost N39 billion in value as market capitalisation depreciated to N21.491 trillion.
The downturn was impacted by losses recorded in medium and large capital stocks, including Dangote Cement, Flour Mills of Nigeria, Guinness Nigeria, NASCON Allied Industries, and FBN Holdings (FBNH).
Nigerian equities market extended negative sentiments at the end of Tuesday’s transactions on the trading floor of the NSE, causing the ASI depreciate further by 0.07 per cent.
The ASI shed 30.75 absolute points, representing a loss of 0.07 per cent to close at 41,051.63 points. Accordingly, investors lost N16 billion in value as market capitalisation slipped to N21.475 trillion.
The downturn was impacted by losses recorded in medium and large value stocks, including Ardova Plc, BUA Cement, UAC of Nigeria (UACN), Access Bank, and Red Star Express.
NSE reversed two days losses to close upbeat on Wednesday, as investors renewed interest in insurance stocks.
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