Cheap stocks prices, gradual easing of the lockdown, and inflow of facilities from the International Monetary Fund (IMF), propelled activities on the equities sector of the Nigerian Stock Exchange (NSE), as the market sustained nine successive sessions of bullish rally into the first week.
Consequently, the NSE All-share index (ASI), and market capitalisation both appreciated by 4.45 per cent to close the week at 24,045.40 and N12.531trillion, respectively.
All other indices finished higher with the exception of NSE ASeM, which shed 0.18 per cent.
A breakdown of transactions during the week showed that the equities market commenced trading for the month of May in an upbeat on Monday, with the ASI gaining 0.30 per cent.
Precisely, the ASI increased by 68.85 absolute points or 0.30 per cent to close at 23,089.86 points. Similarly, the market capitalisation gained N36billion to close at N12.033trillion.
The upturn was impacted by gains recorded in medium and large value stocks, amongst which were; MTN Nigeria, Ardova Plc, Dangote Sugar Refinery, UAC of Nigeria (UACN), and Union Bank of Nigeria (UBN).
Following sustained bargain hunting in most bluechip stocks, trading activities continued upbeat on Tuesday, causing market capitalisation to increase further by N375billion.
Positive sentiments persisted at close of transactions on Wednesday, spiking the index to rise further by 1.40 per cent.
Analysts also pointed out that the market’s high dividend yield would continue to attract buying interests, even as more audited corporate earnings hit the market, going forward, despite the likely continuation of selloffs.
Specifically, the Chief Executive Officer, Investdata Consulting, Ambrose Omordion, said investors are buying to increase their positions in undervalued stocks ahead of dividend declaration and Q1 numbers.
Furthermore, he noted that investors and traders are positioning amidst the changing sentiments in the hope of improved liquidity and positive economic indices.
“The market had mixed sentiment during the session, extending to its ninth successive day of the rally with the key performance index closing higher on weaker gains, but very high traded volume.
“We see investors focusing on the upcoming full-year earnings season, targeting companies with strong potentials to grow their dividend on the strength of their earnings capacity.
“Investors must understand certain things in stock markets, especially what is currently happening to the Nigerian market and economic fundamentals, alongside emerging global events and data.
“To identify real opportunities for superior investment or trade, investors must be aware of what is happening in the environment, by filtering the market noise and media-induced fear or hype.
He continued: “Obviously, the market is still very bullish in terms of the current overall market trend, but technical tools signal a short-term overbought in this recovery move, indicating that a pullback is underway in form profit-taking or short-term price correction.”
He added: “Yes, our daily time frame did support a bullish transition within this long-term bearish bull rally on the NSE. There is an opportunity to take a bullish trade within a long bearish index movement, but there must be a good exit strategy at every moment of the season.”
Analysts at Codros Capital, said: “In our opinion, risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions.
“Thus, we continue to advise investors to trade cautiously and seek trading opportunities in only fundamentally justified stocks.”
