After four consecutive days of upswing during which they gathered N518 billion, Nigerian equities relapsed into the red zone yesterday after the Central Bank of Nigeria (CBN) announced decisions to maintain current monetary policy.
The Monetary Policy Committee (MPC) of the CBN on Tuesday concluded its two-day maiden meeting in 2016 and took a unanimous decision to retain the benchmark interest rate, Monetary Policy Rate (MPR), at 11 per cent. The 12 members of the MPC voted unanimously to keep the rate unchanged. The apex bank also maintained the Cash Reserve Ratio (CRR) for commercial banks at 20 per cent. The meeting did also not broach the much-talked about devaluation of Naira.
Amidst concerns that the foreign portfolio investors, who had expected a devaluation of Naira, could trigger another round of capital outflow, investors sought to lock-in profits from the recent uptrend and to realign portfolio in the light of the current monetary policies.
The All Share Index (ASI)-the value-based index that tracks prices of quoted companies on the NSE, declined to 23,832.03 points as against its opening index of23, 963.64 points. Aggregate market value of all quoted equities dropped from N8.241 trillion to close at N8.196 trillion. The decline brought the negative average year-to-date return to -16.79 points.
Sectoral analysis showed widespread negative sentiments. The NSE Banking Index and the NSE Consumer Goods Index dropped by 1.0 per cent each. The NSE Insurance Index declined by 0.9 per cent. The NSE Industrial Goods Index slipped by 0.08 per cent. However, the NSE Oil & Gas Index appreciated by 0.8 per cent.
There were 29 losers to 15 gainers. Nestle Nigeria, NSE’s highest-priced stock, led the losers with a loss of N16.16 to close at N708.85. Unilever Nigeria followed with a loss of N2.05 to close at N39.04. GlaxoSmithKline Consumer Nigeria dropped by N1.40 to close at N26.60. Nigerian Breweries lost N1.16 to close at N101.64. Guaranty Trust Bank and Stanbic IBTC Holdings lost 30 kobo each to close at N15.99 and N13.00 respectively. Guinness Nigeria dropped by 20 kobo to close at N112 per share. Union Bank of Nigeria lost 20 kobo to close at N5.50 while Caverton Offshore Services Group and Nigeria Aviation Handling Company dropped by 19 kobo each to close at N2.05 and N3.71 respectively.
On the other positive side, Seplat Petroleum Development Company led the contrarian stocks with a gain of N6.34 to close at N170.88. Seven-Up Bottling Company followed with a gain of N6 to close at N196. Cadbury Nigeria chalked up N1.34 to close at N15.92. Julius Berger Nigeria rose by N1.10 to close at N43.10. PZ Cussons Nigeria added 75 kobo to close at N21 per share. Okomu Oil Palm added 60 kobo to close at N30.60. UAC of Nigeria rose by 42 kobo to close at N20.35. Oando gathered 13 kobo to close at N4 while Flour Mills of Nigeria inched up by 5.0 kobo to close at N18 per share.
Volume and value of activities dropped by 33.6 per cent and 21.9 per cent with a turnover of 142.9 million shares worth N1.6 billion traded in 3,305 deals. The most active stock was Zenith Bank with a turnover of 17.82 million shares worth N216.11 million in 234 deals.
“Given that gains on the bourse have been majorly on bargain hunting, the loss recorded today as well as the weak sentiments indicate profit-taking activities. The decision of the MPC to leave all rates unchanged and not make a call on the Naira could further dampen investors’ appetite in the equity market and spur selloffs in the trading session ahead. We advise short-term investors to thread with caution while longer term investors can look beyond the near term risk to take advantage of the cheap market valuations,” Afrinvest Securities stated.
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