News Column

Profit Taking Halts Bullish Run

July 21, 2014

Goddy Egene and Eromosele Abiodun

The Nigerian equities market closed in the red last week after recording a strong performance in the preceding two weeks.

The setback could be attributed to massive profit taking by anxious investors who had bet on the rally following better-than-expected second quarter results released by some quoted companies.

Stakeholders in the stock market had smiled home the previous week as the market sustained its bullish run following investors rush to take position ahead of strong second quarter results.

The had market posted strong showing in four trading days the previous week, lifting the NSE All-Share Index or ASI and market capitalisation by a massive 2.00 per cent to close higher last Friday at 43,031.81 points and N14.209 trillion respectively.

The previous week's performance was however boosted by surprise second quarter results released by, Unity Bank Plc. The bank's pre-tax earnings increased significantly by 81.33 per cent to N7.89 billion from N4.35 billion over the period, fuelling rumours that banks may post strong Q2 results.

However, at the close of business last week, the NSE ASI and market capitalisation both depreciated by 0.46 per cent to close lower on Friday at 42,832.82 and N14.143 trillion respectively.

Similarly, three of NSE sector indices depreciated during the week with the exception of five which appreciated.

Meanwhile, some traders told THISDAY last week that the days ahead will be positive as the profit taking activities die down and 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 when profit taking reduces and investors might seek to capitalise on undervalued stocks particularly the banking stocks," said a trader.

Summary of daily performance The market had closed on a negative note at the end of business last Monday, as the ASI depreciated by 0.64 per cent to close at 42,758.02 points, compared with the appreciation of 0.81 per cent recorded the previous Friday.

In the same vein, the market capitalisation depreciated by 0.64 per cent to close at N14.12 trillion, compared with the appreciation of 0.81 per cent recorded the previous Friday to close at N14.21 trillion.

The depreciation in the Index could be attributed to the losses recorded in the share prices of Dangote Cement Plc, Unilever Nigeria Plc, Guaranty Trust Bank Plc, Cadbury Nigeria Plc and Seplat Petroleum Plc amongst others. The total value of the stocks traded on the floors of the NSE on the day was N4.51 billion, up by 39.10 per cent from N3.24 billion traded the previous Friday.

The market gained modestly on Tuesday as the wave of profit taking observed in the previous day's trading session reversed. Although the ASI lost steam intraday due to resistance from consumer goods giant; Nigerian Breweries Plc, a combined 138.15pts support from Dangote Cement Plc and Nestle Nigeria Plc bolstered the benchmark index into its 0.24 per cent positive close.

The ASI traded within a broad band of 42,071.19pts to 42,922.69pts, before settling at a 42,861.78 points close. Similarly, market capitalisation grew by N34.26 billion to close N14.15 trillion. Heavy trades in FBN Holdings Plc and Dangote Cement Plc boosted market turnover, accounting for 35.52 per cent of market value.

The market continued its upward trend on Wednesday as index went up by 0.41 per cent to close at 43,039.42 points from 42,861.80 points attained on Tuesday. Also, the market capitalisation of equities increased to N14.152 trillion from N14.152 trillion the previous trading day.

A total number of 29 stocks gained on the bourse on the day while 18 stocks declined leaving 65 stocks unchanged. Forte Oil Plc emerged the toast of investors as it appreciated by 6.01 per cent to close at N210.00, closely followed by Transcorp Plc with a 3.29 per cent gain to close at N5.65. Others on the gainers chart include; PZ Cussons Plc, Custodian & Allied Plc and Ashaka Cement Plc.

The mood in the market turned sour on Thursday as the ASI slipped by 0.08 per cent to close at 43,004.38 points on the back of sell pressure on large-cap stocks. The intraday chart showed Dangote Cement Plc solely pulled the market down by 108.74 points as profit taking on the cement giant in the last hour of trade led to a 0.81 per cent price decline.

In line with the ASI, the market capitalisation trimmed by N11.56 billion to close at N14.20 trillion. Meanwhile, activity level as gauged by movement in volume and value of transactions improved relative to the previous session.

Value of transaction was up by 47.8 per cent to reach N3.61 billion as well as volume traded which rose by 58.2 per cent to 310 million shares. The market ended last week on a negatively note as index dropped by 0.40 per cent to close at 42,832.82 from 43,004.38 attained last Thursday.

Market capitalisation also decreased to N14.143 trillion from N14.199 trillion the previous trading day. A total number of 24 stocks gained on the bourse on the day while 31 stocks declined leaving 57 stocks unchanged.

Forte Oil Plc emerged the toast of investors as it appreciated by 6.15 per cent to close at N234.06, closely followed by Ashaka Cement Plc with a 5.00 per cent gain to close at N32.55. Others on the gainers chart include; Honeywell Plc, Aiico Plc and Guinness Nigeria Plc.

Market turnover Analysis of trading results for the week under review showed that a total of 1.832 billion shares worth N19.394 billion in 26,521 deals were traded last week by investors on the floor of the Exchange in contrast to a total of 2.272 billion shares valued at N28.624 billion that exchanged hands the previous week in 26,730 deals.

The financial services industry (measured by volume) led the activity chart with 1.313 billion shares valued at N9.533 billion traded in 12,356 deals; thus contributing 71.70 per cent and 49.16 per cent to the total equity turnover volume and value respectively.

The conglomerates industry followed with a turnover of 241.568 million shares worth N1.459 billion in 2,788 deals. The third place was occupied by the oil and gas industry with 118.216 million shares worth N2.772 billion in 4,684 deals.

Trading in the top three equities namely- FBN Holdings Plc, Transnational Corporation of Nigeria Plc and Fidelity Bank Plc (measured by volume) accounted for 662.811 million shares worth N6.011 billion in 5,125 deals, contributing 36.18 per cent and 30.99 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 836,683 units of Exchange Traded Products (ETPs) valued at N18.094 million executed in 21 deals compared with a total of 223,359 units valued at N4.452 million transacted the previous week in 19 deals.

Similarly, 10,600 units of FGN bonds valued at N13,644 million were traded this week in 2 deals compared with a total of 730 units of FGN bonds valued at N863, 405.77 transacted last week in 1 deal.

Gainers and losers Meanwhile, the price movement chart of the NSE displayed a total of 40 equities that appreciated in prices during the week lower than 43 equities of the preceding week. Thirty-seven equities depreciated in prices higher than 35 equities of the preceding week, while 123 equities remained unchanged higher than 122 equities recorded in the preceding week.

The top 10 gainers in the top 10 category were: Forte Oil Plc (N33.98), Ashaka Cement Plc (N3.55), NPF Microfinance Bank Plc (14 kobo), TRANSCORP Plc (56 kobo), DN Meyer Plc (10 kobo), Niger Insurance Plc (4 kobo), Royal Exchange Assurance Plc (4 kobo), Learn Africa Plc (11 kobo) Vitafoan (28 kobo) and RT Briscoe Plc (7 kobo).

On the other hand, the top 10 losers included: UAC of Nigeria Plc (N4.41), Unilever Nigeria Plc (N3.50), Airline Services and Logistics Plc (22 kobo), Cutix Plc (17 kobo), Neimeth Plc (11 kobo), Custodian and Allied Insurance Plc (32 kobo), Fidson Healthcare Plc (25 kobo), UBA Capital Plc (18 kobo), Mansard Insurance Plc (18 kobo) and University Press Plc (23 kobo).

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Source: AllAfrica

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