News Column

Stock Market Volatility Persists

June 23, 2014

Goddy Egene and Eromosele Abiodun

The recent volatility in the Nigerian equities market was sustained last week as more investors booked profits

Earning season momentum that drove share prices northward eased off early June, the market has as a result remained unstable.

The stock market however recorded a pocket of gains during the period following announcement by the new governor of Central Bank of Nigeria (CBN), Mr Godwin Emiefele, that he plans to reduce interest rates.

But the situation changed mostly last week when news hit the market that the bankers committee has decided against reducing interest rates at the moment.

The bulls succumbed to the bears the previous week following huge sell pressure that was fuelled by profit taking activities.

Meanwhile, at the end of trading activities last week, the Nigerian Stock Exchange (NSE) All-Share Index or ASI and the market capitalisation of listed equities depreciated by 0.93 per centto close on Friday at 41,129.27 and N13.581 trillion respectively.

However, three of the NSE indices appreciated during the week with the exception of the NSE 30 Index (1.69%) 169 bps, NSE Banking Index (4.96%) 496 bps, NSE Consumer Goods Index (2.20%) 220bps and NSE Lotus II (0.86%) 86bps. Meanwhile, NSE ASeM index closed flat.

Meanwhile, despite the volatility witnessed in the market last week, traders are optimistic that the market may be heading for a huge rally as investors scramble for stocks with inherent value.

Some stakeholders had told THISDAY the previous week that the days ahead will be positive as more investors scramble for undervalued stocks with strong full year results.

"We expect that positive momentum will commence towards the first half of next week as investors might seek to capitalise on undervalued stocks particularly the banking stocks. But most importantly the days ahead will be very interesting for stakeholders in the capital market if the promise to reduce interest rates come to fruition," said a trader.

Summary of daily performance Trading had last week commenced on a negative note as the benchmark index declined by 0.16 to close at 41,449.51 points from 41,517.10 attained the previous Friday. The market capitalisation of listed equities also decreased to N13.686 trillion from N13.708 trillion the previous Friday.

A total number of 26 stocks gained on the bourse on the day as against 30 stocks that declined leaving 66 stocks unchanged.

The equities market closed on a negative note again on Tuesday, as the benchmark index fell by 0.76 per cent to close at 41,135.40 points, compared with the depreciation of 0.16 per cent recorded on Monday.

Similarly, the market capitalisation depreciated by 0.76 per cent to close at N13.58 trillion, compared with the depreciation of 0.16 per cent recorded yesterday to close at N13.69 trillion.

The depreciation in the index on the day was as a result of the losses recorded in the share prices of some highly capitalised stocks such as: Nigerian Breweries Plc, Guinness Nigeria Plc, Nestle Nestle Plc, Guaranty Trust Bank Plc and FBN Holdings Plc amongst others. The total value of the stocks traded was N4.06 billion, up by 107.10 per cent from N1.96 billion traded on Tuesday.

The market returned to positive territory on Wednesday as the benchmark index appreciated by 0.09 per cent to close at 41,171.16 from 41,135.40 attained on Thursday. The market capitalisation of listed equities also increased to N13.594 trillion from N13.582 trillion on Thursday.

A total number of 32 stocks gained on the bourse on the day while 31 stocks declined leaving 62 stocks unchanged. Oando Plc, emerged the toast of investors as it appreciated by 7.99 per cent to close at N25.00, followed by Continental Reinsurance Plc, which gained 3.70 per cent to close at N1.12. Others on the gainers chart include Ecobank Transnational Incorporated, Access Bank Plc and AIICO Insurance Plc.

The equities market closed southward on Thursday as the index depreciated by 0.25 per cent to close at 41,068.93 points, compared with the appreciation of 0.09 per cent recorded on Wednesday.

In the same vein, the market capitalisation depreciated by 0.25 per cent to close at N13.56 trillion, compared with the appreciation of 0.09 per cent recorded the previous day to close at N13.59 trillion.

The depreciation in the benchmark index on Thursday could be attributed to the losses recorded in the share prices of Nigerian Breweries Plc, Dangote Cement Plc, Nestle Nigeria Plc, Guaranty Trust Bank Plc and FBN Holdings Plc amongst others. The total value of the stocks traded on the floors of the NSE on the day was N4.18 billion, down by 22.68 per cent from N5.40 billion traded the previous day.

On Friday, the bulls resurfaced on the bourse after Thursday's decline, supporting the 0.15 per cent climb of the ASI. The intraday chart showed the benchmark index traded within a tight band of 41,100.64 points (low) and 41,380.51 points (high) as heavy weight; Guaranty Trust Bank Plc and Dangote Cement Plc attempted a negative outcome while positive sentiments towards Oando PLc and Nigerian Breweries Plc buoyed the benchmark to its 41.129.29 points close.

Activity level waxed stronger relative to the previous session as both volume and value of trades increased by 31.9 per cent and 5.9 per cent respectively. By the close of trades, a total of 419.09 million units of shares valued at N4.44 billion were consummated in 5,740 deals.

Market turnover Analysis of trading results for the week under review showed that activities was weak as investors traded a total of 1.528 billion shares worth N20.080 billion in 26,820 deals in contrast to a total of 2.732 billion shares valued at N22.165 billion that exchanged hands the previous week in 26,074 deals.

The Financial Services Industry (measured by volume) led the activity chart with 973.567 million shares valued at N7.990 billion traded in 12,764 deals; thus contributing 63.72 per cent and 39.79 per cent to the total equity turnover volume and value respectively.

The Conglomerates Industry followed with a turnover of 194.779 million shares worth N1.046 billion in 2,394 deals. The third place was occupied by the Oil and Gas Industry with 170.164 million shares worth N3.889 billion in 4,351 deals.

Trading in The Top Three Equities Namely- Transnational Corporation of Nigeria Plc, Wapic Insurance Plc and Oando Plc (measured by volume) accounted for 445.754 million shares worth N3.793 billion in 5,126 deals, contributing 29.17 per cent and 18.89 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 226,863 units of Exchange Traded Products (ETPs) valued at N5,089,607.22 executed in 26 deals compared with a total of 466,975 units valued at N9,450,575.20 transacted last week in 18 deals.

Similarly, 100 units of FGN bonds valued at N123, 560.54 were traded this week in 1 deal compared with a total of 2,900 units valued at N3, 580,914.94 transacted last week in 2 deals.

Gainers and losers Meanwhile, the price movement chart of the NSE displayed a total of 36 equities that appreciated in prices during the week lower than 44 equities of the preceding week. Forty-five equities depreciated in prices higher than 32 equities of the preceding week, while 119 equities remained unchanged lower than 124 recorded in the preceding week.

The top 10 gainers in the top 10 category were: MRS Oil Nigeria Plc (N16.00), Oando Plc (N10.37), Ashaka Cement Plc (N1.89), Caverton Offshore Support GRP Plc (N1.31), TRANSCORP Plc (60 kobo), Japaul Oil and Maritime Services Plc (6 kobo), Costain Plc (12 kobo), Redstar Express Plc (38 kobo) AIICO Insurance (6 koboand Mansard Insurance Plc (15 kobo).

On the other hand, the top 10 losers included: Conoil Plc (N4.13), Guaranty Trust Bank Plc (N2.43), Champion Breweries Plc (N1.85), Zenith Bank Plc (N1.50), RT Briscoe Plc (11 kobo), Computer Warehouse Plc (53 kobo), Prestige Assurance Plc (4 kobo), Evans Medical Plc (18 kobo), Learn Africa Plc (10 kobo) and West Africa Provincial Insurance Plc (4 kobo).


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Source: AllAfrica


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