Despite predictions that Nigeria’s equities market would start the week on a positive footing, bearish sentiments dominated the market as the volume of transactions on the floor of the Nigerian Exchange Limited (NGX) fell by 25.22 per cent week-on-week (w/w).
With investors liquidating their holdings to cash out the profits that they had created, cautious trading was the theme of activities even as companies continued to release their second half (Q2 2021) earnings.
Hence, the market’s All Share Index (ASI) shed 0.12 per cent w/w to close at 37,947.18 points while market capitalisation decreased by N25 billion to close at N19.771 trillion from an opening value of N19.79 trillion. Pertinently, sell-offs in bellwether stocks; NB (-3.3 per cent), Dangote Sugar (-2.2 per cent), Zenith Bank (-2.0 per cent) and BUA Cement (-0.7 per cent), drove the weekly loss.
According to the market performance report of the NGX for the week ended 16th July 2021, activity levels were weak, as trading volume and value of stocks declined by 25.2 per cent w/w and 10 per cent w/w, respectively.
A total turnover of 1.008 billion shares worth N10.923 billion in 17,297 deals were traded this week by investors on the floor of the exchange, in contrast to a total of 1.348 billion shares valued at N12.140 billion that exchanged hands last week in 21,581 deals.
Reacting to the development, analysts at Cordros capital revealed that the outcome of the bond auction scheduled to hold next week will shape market sentiments while adding that they expect investors to trade cautiously while taking positions in stocks with attractive dividend yields ahead of H1 2021 dividend declarations, which intermittent profit-taking activities would match.
“Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings”, Cordros capital said.
For analysts at Afrinvest, traders as well as investors should expect increased volatility in market performance as more companies release their H1 2021 earnings results.
Trading in the top three equities namely Guaranty Trust Holding Company Plc, United Bank for Africa Plc and Zenith Bank Plc (measured by volume) accounted for 261.741 million shares worth N5.813 billion in 3,498 deals, contributing 25.95 per cent and 53.22 per cent to the total equity turnover volume and value respectively.