Analysts foresee cautious trading at stock market as fourth quarter begins

Capital market analysts anticipated cautious trading in the local stock market this week due to the absence of significant positive catalysts to boost sentiments.

The bearish mood on the Nigerian stocks persisted as selloffs and profit booking continued to defy the quarter-end window dressing on a declining traded volume, reflecting the mixed sentiment, as well as the wait-and-see attitude of investors ahead of the third quarter (Q3) earnings reporting season.

The market is also awaiting any hint of a clear direction for the nation’s monetary policy from the new Central Bank of Nigeria (CBN) management.

Analysts Optimism
In the new week, analysts at Cowry Assets Management Limited said: “We anticipate the bearish sentiment to continue as the market seeks catalyst and policy pronouncements to trigger the bullish sentiment.

“However, as we drive into the final quarter of the year and the reporting season draws closer, investors will begin to rebalance their portfolio in their search for alpha in preparation for the quarter-ending reporting season. Meanwhile, we continue to advise investors on taking positions in stocks with sound fundamentals.”

Cordros Securities Limited stated that “in the short term, we anticipate cautious trading in the local stock market due to the absence of significant positive catalysts to boost sentiments. Overall, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings.”

Last Week’s Trading Activities

It was a brutal week for equity investors as the Nigerian stock market recorded losses in all four trading sessions of the week.

Notably, the All-Share index dipped by 1.40 percent week-on-week (W-o-W) to close at 66,382.14 points. Similarly, market capitalization shed N516 billion W-o-W to close at N36.331 trillion.

The sectoral performance was in the mix-bargain as the see-saw movement continued across stocks. The NGX Insurance and NGX Consumer Goods indices were the best-performing indices as they garnered gains of 2.77 percent and 1.59 percent week-on-week. On the flip side, the NGX Banking index declined by 4.17 percent for the week. The NGX Industrial Goods index recorded a weekly decline of 3.04 percent, while the NGX Oil & Gas index declined by 1.24 percent.

Also, market breadth for the week was negative as 25 equities appreciated, 47 equities depreciated, while 83 equities remained unchanged. Beta Glass led the gainer’s table by 30.41 percent to close at N60.90, per share. Ikeja Hotel followed with a gain of 30 percent to close at N3.25, while CWG went up by 23.57 percent to close to N8.65, per share.

On the other side, Oando led the decliner’s table by 33.76 percent to close at N7.85, per share. FTN Cocoa Processors followed with a loss of 19.68 percent to close at N1.51, while SUNU Assurances declined by 14.29 percent to close at 90 kobos, per share.

Overall, a total turnover of 1.339 billion shares worth N17.916 billion in 27,874 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 3.911 billion shares valued at N30.379 billion that exchanged hands the prior week in 38,536 deals.

The Financial Services Industry (measured by volume) led the activity chart with 940.539 million shares valued at N11.370 billion traded in 14,627 deals; contributing 70.25 percent and 63.46 percent to the total equity turnover volume and value respectively.

The Conglomerates Industry followed with 95.954 million shares worth N584.249 million in 1,760 deals, while the Oil and Gas Industry traded a turnover of 69.323 million shares worth N782.269 million in 1,688 deals.

Trading in the top three equities; Access Holdings, United Bank for Africa (UBA), and Transnational Corporation (Transcorp) accounted for 456.454 million shares worth N6.469 billion in 6,579 deals, contributing 34.09 percent and 36.11 percent to the total equity turnover volume and value respectively.

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