Analysts Predict Mixed Trading in August as Stock Market Drops by N108bn WoW

Kayode Tokede

Analysts have predicted mixed trading in the Nigerian stock market in August 2024, extending the decline that brought changes in market fundamentals in July 2024.

In the first trading week in August, the stock market segment of the Nigerian Exchange Limited (NGX) experienced another downturn as it saw profit-taking despite the ongoing half-year (H1) ended June 30, 2024 corporate earnings.

The negative close serves as a reflection of the impact of government policies and weakening economy even as the benchmark index retreated amidst negative internals, lower traded volumes and low valuations.

Analysts at Cordros Research in a report said, “While we expect the ongoing H1-24 earnings season to ultimately guide the market’s direction over the short term, we still expect bearish sentiments to remain the key theme as investors remain cautious and continue to exhibit weak appetite for Nigerian tickers.”

Also, analysts at Cowry Assets Management Limited in a report stated that “we foresee a mixed trend with a possibility of profit-taking. Investors are likely to engage in sectoral rotation, capitalizing on stocks that experience pullbacks to position themselves strategically.

“This rotation strategy is expected to create buying opportunities, especially in anticipation of upcoming releases and dividend announcements from major banking institutions in the corporate reporting season. As the market structure and fundamentals evolve, investors are advised to position themselves in stocks with sound fundamentals to navigate the prevailing conditions effectively.”

The chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion said “we expect mixed sentiments and reversal on reactions to the surprising earnings reports and sector rotation amidst low valuation. Portfolios repositioning is however continuing, as investors take advantage of pullbacks to buy into value.”

He noted that “this is amid the volatility and pullbacks that add more strength to upside potential. Consequently, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.”

From the weekly market report, the NGX All-Share Index nosedived by 0.46 per cent week-on-week to 97,745.73  basis points. Consequently, market capitalisation lost N108 billion W-o-W to close at N55.497 trillion.

Across the sectoral front, it was a mixed outing. The NGX Oil & Gas index recorded a weekly gain of4.27 per cent, while NGX Insurance index rose by 1.59 per cent W-o-W. On the other hand, the NGX Consumer Goods index led the laggards for last week by 3.33 per cent week on week. The NGX Banking index followed with a weekly decline of 0.48 per cent, while NGX Industrial index down by 0.01 per cent for the week.

The market breadth for the week closed the same as 40 equities appreciated in price, 40 equities depreciated in price, while 71 equities remained unchanged. R T Briscoe led the gainers table by 25.37 per cent to close at 84 kobo, per share. Oando followed with a gain of 24.32 per cent to close at N25.30, while Industrial & Medical Gases Nigeria went up by 20.77 per cent to close to N15.70, per share.

On the other side, United Capital led the decliners table by 68.81 per cent to close at N12.15, per share. MeCure Industries followed with a loss of 18.78 per cent to close at N7.35, while Thomas Wyatt Nigeria declined by 18.52 per cent to close at N1.76, per share.

Overall, a total turnover of 3.393 billion shares worth N52.304 billion in 44,814 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 3.557 billion shares valued at N47.220 billion that exchanged hands previous week in 42,871 deals.

The Financial Services Industry (measured by volume) led the activity chart with 2.875 billion shares valued at N36.995 billion traded in 23,791 deals; contributing 84.73 per cent and 70.73 per cent to the total equity turnover volume and value respectively. The Oil and Gas Industry followed with 141.927 million shares worth N6.698 billion in 4,476 deals, while the Consumer Goods Industry traded a turnover of 97.306 million shares worth N4.047 billion in 4,179 deals.

Trading in the top three equities; Fidelity Bank, United Bank for Africa (UBA) and Zenith Bank accounted for 2.099 billion shares worth N28.215 billion in 7,603 deals, contributing 61.87 per cent and 53.94 per cent to the total equity turnover volume and value respectively.