By Peter Egwuatu
Trading activities on the Nigerian Exchange Limited, NGX, last week sustained its rebound on increased buying sentiment and price appreciation by highly priced stocks as investors await interim dividends and inflation data announcement for further investment decisions.
Analysts have emphasized that all eyes are on macroeconomic reports, especially the July consumer price index, adding that the slide in Purchasing Managers’ Index, PMI, for the month of July to 51.7 points from 53.2 points in June, indicated a sustained weakening of business conditions since March 2023.
Meanwhile, analysis of the stock market showed that the benchmark NGX All-Share index closed higher by 0.21% Week-on-Week, WoW, to 65,198.08 points from 65,056.39 points the previous week.
Similarly, another stock market gauge, the market capitalization, closed higher to N35.479 trillion from N35.402 trillion the previous week.
The Month-to-Date, MtD, and Year-to-Date ,YtD, returns recorded 1.6% and 27.2%, respectively.
However, activity levels remained weak as the trading volume and value declined by 9.8% and 21.3% WoW respectively.
Meanwhile, sectoral performance was mixed, as Insurance Index went up 5.9%, Consumer Goods Index 2.3% and Industrial Goods Index 0.2% while the Banking Index declined by 2.1%, and Oil and Gas Index 0.7%.
Commenting on market performance and outlook, analysts at Cordros Research stated: “We believe earnings from the Tier-1 banks in the coming week(s) will support positive sentiments on the bourse, especially given the anticipation of interim dividends. In the medium term, we expect investors’ sentiments to be influenced by developments in the macroeconomic landscape and the movement of yields in the fixed-income market.
”Overall, we reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings.”
On market outlook, analysts at Investdata Consulting stated: “We expect mixed sentiments on profit taking and continued value oriented sector rotation, as market players digest corporate action of interim dividend ahead of July inflation data and first tier banks earnings reports even as bargain hunters take advantage of the pullbacks to rebalance their portfolios amidst economic reforms of the government, just as more policy pronouncements and economic managers hit the ground running, a situation expected to offer investment direction.
”Also, more Q2 earnings reports are expected to confirm the real state of the company performance and attract liquidity in the midst of markdown dates and the release of remaining audited accounts.
”We note that discerning investors have continued to target fundamentally sound companies and defensive stocks to protect their portfolios.”
Source: Vanguard