Investors appeared to have turned to low-priced stocks, otherwise known as penny stocks, as bargain-hunters seek to build strong lead in low-priced value stocks with potential for capital appreciation and high dividend yields.
Low-priced stocks recorded the largest volumes and highest capital appreciation on Wednesday at the Nigerian Stock Exchange (NSE). With N4.36 trillion net capital appreciation in 2017, market pundits expected the stock market to sustain its winning streak on 2018, fuelling early scramble for value stocks.
There were more than three advancers for every decliner on Wednesday, the second trading session in 2018. The momentum of activities also improved considerably with total turnover of 589.58 million shares valued at N2.12 billion in 4,366 deals.
Penny stocks dominated the activities chart. Skye Bank was the most active stock with 190.02 million shares valued at N101.73 million. Transnational Corporation of Nigeria followed with 93.42 million shares valued at N144.62 million while Diamond Bank recorded a turnover of 79.38 million shares worth N136.32 million.
Many penny stocks also recorded the highest percentage gains at the stock market on Wednesday. Diamond Bank led with 9.55 per cent gain to close at N1.72. FCMB Group also rose by 9.49 per cent to close at N1.73. Fidelity Bank appreciated by 8.53 per cent to close at N2.80 while Wema Bank rose by 8.0 per cent to close at 54 kobo per share.
Meanwhile, a considerable decline in the share price of Dangote Cement coloured the overall market position at the Exchange negative. Dangote Cement, which accounts for more than one-third of market value of all quoted equities, dropped by N7 or 3.04 per cent to close at N223 per share. This negatively impacted the overall market position to a day-on-day decline of 0.20 per cent, equivalent to net capital loss of N27 billion.
The decline depressed the two-day average year-to-date return to -0.15 per cent. Aggregate market value of all quoted equities at the NSE dropped from its opening value of N13.617 trillion to close at N13.590 trillion. The All Share Index (ASI) – the main value-based common index that tracks share prices at the NSE, also dropped from its opening index of 38,264.79 points to close at 38,187.28 points.
With 37 advancers to 11 decliners, the underlying market sentiments remained largely positive. All sectoral indices closed positive with the exception of the NSE Oil and Gas Index, which declined by 1.4 per cent. The NSE Insurance Index recorded the highest gain of 1.5 per cent. The NSE Banking Index followed with a gain of 1.2 per cent. The NSE Industrial Goods Index rose by 0.6 per cent while the NSE Consumer Goods Index inched up by 0.5 per cent.
In value terms, 11, formerly Mobil Oil Nigeria, led the decliners with a loss of N17.80 to close at N176.80. Presco dropped by a loss of N2 to close at N66.50. Cadbury Nigeria declined by 65 kobo to close at N14.95 while Unilever Nigeria lost 35 kobo to close at N39.86 per share.
On the positive side, Lafarge Africa recorded the highest gain of N2.21 to close at N47.10. Dangote Sugar Refinery followed with a gain of N1.51 to close at N21.87. Dangote Flour Mills added 60 kobo to close at N12.75. Nascon Allied Industries chalked up 58 kobo to close at N19.80 while Ecobank Transnational Incorporated rose by 47 kobo to close at N16.74 per share.
“Despite today (Wednesday)’s negative performance, investor sentiment strengthened, hence we expects to see a rebound in the market in subsequent trading sessions,” Afrinvest Securities stated.
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