Nigerian equities opened on Monday with widespread losses across the sectors but gains by highly capitalised companies sustained a modest positive overall market position.
With 22 losers to 13 gainers, the pricing trend tilted heavily towards the downside but gains by large-cap stocks such as Guaranty Trust Bank, the most capitalised banking stock and Nestle Nigeria, highest-priced stock, muted the losses and helped the market to a modest gain of N4 billion.
Aggregate market value of all quoted equities on the Nigerian Stock Exchange (NSE) rose from its opening value of N8.878 trillion to close at N8.882 trillion. The All Share Index (ASI), the common value-based index that tracks prices at the Exchange, rose by 0.07 per cent to close at 25,671.55 points as against its opening index of 25,653.16 points.
With the market running positive for the fifth consecutive trading session, the negative average year-to-date return has improved, though still negative, to -4.48 per cent.
Sectoral analysis also reflected the underlining dynamics in the overall market situation with larger number of losers but gains by large-cap influencers muffling such losses. Most sectoral indices thus closed on the positive.
The NSE Oil & Gas Index rose by 0.95 per cent. The NSE Banking Index trailed by 0.9 per cent. The NSE Consumer Goods Index rose by 0.4 per cent while the NSE Insurance Index closed flat. However, the NSE Industrial Goods Index declined by 0.3 per cent.
Nestle Nigeria led the gainers with a gain of N19.99 to close at N750. Mobil Oil Nigeria followed with a gain of N14 to close at N294. Guaranty Trust Bank rose by 85 kobo to N27.15. Ecobank Transnational Incorporated and Nigerian Aviation Handling Company added 10 kobo each to close at N9.80 and N2.10 respectively while Dangote Flour Mills chalked up 9.0 kobo to close at N3.67 per share.
Total turnover stood above average at 495.23 million shares worth N2.55 billion in 2,587 deals. Custodian and Allied was the most active stock with 176.41 million shares worth N541.59 million. FBN Holdings followed with 150.35 million shares valued at N470.69 million while United Bank for Africa ranked third with 25.1 million shares worth N137.5 million.
On the negative side, Guinness Nigeria led the losers with a loss of N3.32 to close at N63.18. Julius Berger Nigeria followed with a loss of N1.95 to close at N38. Dangote Cement dropped by N1 to close at N165. UAC of Nigeria declined by 49 kobo to close at N13.51 while Cadbury Nigeria dropped by 21 kobo to close at N7.80 per share.
Analysts at SCM Capital Markets, a Lagos-based dealer on the NSE, said they were expecting “mixed mood” at the market on Tuesday, referring to a continuation of the sell pressure with a tendency for low prices to quicken bargain-hunting for value stocks.
“However, a weaker market breadth suggests that investors may take profit in subsequent trading sessions,” Afrinvest Securities, another Lagos-based dealer, stated in a more direct prediction of the possible trading pattern on Tuesday.
Most analysts have said the market may not come under considerable influence in Tuesday’s decisions after the meeting of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN).
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The MPC started its second meeting this year on Monday March 20 and it is expected to announce its decisions on Tuesday March 21, 2017. Most analysts expected the apex bank to maintain status quo.
According to analysts at Afrinvest Securities, the apex bank will maintain status quo on all rates while trying to consolidate on the gains of recent improvements that have been recorded in inflation, parallel market foreign exchange rate, increase in oil production and the release of Economic Recovery and Growth Plan (ERGP) by the fiscal authority.
“Although both the inflation rate and foreign exchange rate have shown signs of improvement in the last few weeks, a change in monetary policy might be too soon. We believe more time is required before a monetary policy change can be effective under the current situation,” FSDH Merchant Bank Limited stated in a prognosis for status quo.
The status quo implies retaining Monetary Policy Rate (MPR) at 14.0 per cent, Cash Reserve Ratio (CRR) at 22.5 per cent, Liquidity Ratio (LR) at 30.0 per cent and the Asymmetric Window at +200 and -500 basis points.
“The implication on the markets, should the MPC maintain status quo, is expected to be neutral given that most foreign investors are staying on the side-line at the moment against the backdrop of an inefficient foreign exchange market.
Currently, the equities market remains quiet and driven only by short term speculative trading and fundamentally attractive earnings release. In the fixed income market, we expect investor appetite to remain tilted towards shorter term government securities given the high yield offering which tends to off-set current inflation risk and also inflation expectation,” Afrinvest Securities stated.
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