NSE LIVE! Equities rally as investors scramble for oil stocks

Nigerian equities broke away from a two-day decline to a major rally on Thursday as investors scrambled for shares of downstream oil majors quoted on the Nigerian Stock Exchange (NSE).

The Federal Government had on Wednesday announced deregulation of the downstream oil sector with the removal of subsidy on premium motor spirit (PMS), otherwise known as petrol. Under the new regime, any Nigerian entity will be allowed to import and sell its own commercially viable rate subject to a ceiling, currently N145 per litre, to be set and monitored by the Petroleum Product Pricing Regulatory Agency (PPPRA).

With the guided deregulation of the downstream, investors flooded the market with open market buy orders for shares of the major petroleum-marketing companies, which analysts said might be at advantage under the new regime.

Oil majors spurred the market to a recovery. Forte Oil led the market with a gain of N10.50 to close at N220.50. Total Nigeria followed with a gain of N9.19 to close at N159.60. Mobil Oil Nigeria chalked up N5.57 to close at N160.66. Seplat Petroleum Development Company gathered N5 to close at N345. Oando rose by 23 kobo to close at N4.80 while Conoil added 6.0 kobo to close at N18.16 per share.

Aggregate market value of all quoted equities on the NSE rose to N8.901 trillion as against its opening value of N8.820 trillion, representing a gain of N81 billion. The All Share Index (ASI)-value-based common index that tracks prices of all quoted equities, rose by 0.91 per cent to close at 25,865.06 points as against its opening index of 25,630.62 points. Average year-to-date return, though still negative, improved to -9.70 per cent.

Other top gainers yesterday included Nestle Nigeria, which rose by N9 to close at N680; Nigerian Breweries, which added N3 to close at N121; PZ Cussons Nigeria, which rose by N1 to close at N22 and Tiger Branded Consumer Goods, which garnered 51 kobo to close at N5.56 per share.

With 37 advancers to 11 decliners, the overall market situation was generally positive. The NSE Oil and Gas Index rose by 3.7 per cent, more than four times than average gain during the five-hour trading session. The NSE Banking Index appreciated by 1.4 per cent. The NSE Consumer Goods Index rose by 1.4 per cent. However, the NSE Industrial Goods Index dropped by 0.5 per cent.

Total turnover volume rose by 32.1 per cent while turnover value dropped by 6.8 per cent, indicating that the growth was driven by low-priced equities. Total turnover stood at 261.94 million shares valued at N1.49 billion in 3,457 deals. Low-priced stocks dominated the activities chart. The three most active stocks were Transnational Corporation of Nigeria, with 41.82 million shares; FBN Holdings, 29.56 million shares and FCMB Group, with 28.24 million shares.

Read also: NSE LIVE! Equities rally on Banks, FMCGs gains

Analysts at FBN Capital Limited said the oil majors could have a pricing advantage given their affiliation to international oil companies (IOCs).

According to analysts, major oil marketers recorded impressive performance in the first quarter because of their ability to source foreign exchange required for product importation, mostly from IOCs, which helped the oil majors to expand their market share.

On the negative side, Unilever Nigeria topped the losers’ list with a loss of N1.22 to close at N36. Flour Mills of Nigeria dropped by N1.18 to close at N22.58. Lafarge Africa declined by N1 to close at N68. Presco lost 68 kobo to close at N35.02 while University Press Plc dropped by 25 kobo to close at N4.90 per share.

Analysts at Afrinvest Securities said the stock market appeared to be witnessing return of sustained bargain-hunting.

“We note the renewed positive sentiment in equities as an indication that market is slowly switching from risk-off investing, which dominated activities in first quarter 2016, to a subtle risk-on mood which has fueled the two week long search for value and rise in the small-mid caps,” Afrinvest Securities stated.

Analysts however noted that while government reforms have been encouraging and stock market appears to have potentials for higher upside, investors need to balance optimism with caution and stick to a value-investing strategy to hedge against potential downside risks of flattish or weak earnings in the second quarter of 2016.

 

 

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