(NSE LIVE) Equities halt downtrend with N109b gain

Nigerian equities halted a six-day downtrend on Tuesday as bargain-hunters increased buy orders for several equities that had been substantially undervalued by recent depreciation. Equities rallied a net gain of N109 billion, equivalent to an average gain of 1.14 per cent.

The rally discounted the 200 basis points increase in the benchmark interest rate by the Central Bank of Nigeria (CBN), which technically increase the attractiveness of fixed-income securities. In portfolio management, the logical assumption is that there is inverse relationship between interest rate and stock market. This implies that when interest rate is low, speculators move their funds from money market instruments to the stock market and vice versa. By this, the increase technically boosts investment in the fixed income securities while it may depress investors’ appetite for equity investment.

But with several quoted companies trading below their intrinsic values, investors sought to build up their equity portfolios as more companies release their half-year results.

Aggregate market value of all quoted companies on the Nigerian Stock Exchange (NSE) rose from N9.489 trillion to close at N9.598 trillion. The All Share Index (ASI), the benchmark index for the stock market, gained 1.14 per cent to close at 27,945.02 points as against its opening index of 27,629.90 points. Average year-to-date return however remained negative, though lower, at -2.43 per cent.

With 24 gainers to 14 losers, the market witnessed substantial bargain-hunting across many sectors. The NSE Banking Index rose by 4.9 per cent. The NSE Insurance Index rallied by 0.9 per cent. The NSE Consumer Goods Index inched up by 0.4 per cent. However, the NSE Oil & Gas Index dropped by 0.3 per cent while the NSE Industrial Goods Index depreciated by 0.2 per cent.

Nigerian Breweries led the gainers with a gain of N1.63 to close at N146.54. Guaranty Trust Bank rose by N1.06 to close at N22.36. Ecobank Transnational Incorporated added N1.04 to close at N13.43. Zenith Bank rose by 74 kobo to N16.39 while Oando gathered 57 kobo to close at N6.20 per share.

Total turnover stood at 286.71 million shares valued at N2.34 billion in 4,316 deals. The three most active stocks were: United Bank for Africa, with 76.91 million shares; Access Bank, 42.74 million shares and Zenith Bank, which accounted for 28.19 million shares.

On the negative side, Seplat Petroleum Development Company led the losers with a loss of N15.67 to close at N297.83. Seven-Up Bottling Company dropped by N6.45 to close at N134. Lafarge Africa declined by 24 kobo to close at N59. Airline Services and Logistics dropped by 10 kobo to close at N1.70 while Fidson Healthcare dropped by 6.0 kobo to close at N1.94 per share.

“In line with our expectation, the MPC voted to raise MPR by 200% to attract foreign capital inflow which is yet to react to the recent reforms in the foreign exchange market while keeping other rates unchanged. We view this as positive for the market given that increased capital inflow will have a positive feedback effect on the financial market,” Afrinvest Securities said.

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