Despite early week’s gains due to speculative play of bargain hunters who took advantage of irregular price movements, analysts at the stock market did not rule out the possibility of a reversal in the session ahead.
The Nigerian Stock Exchange (NSE) All-Share Index All Share Index (ASI) depreciated by 0.65% to close last week at 27,246.88 points from 27,425.86 points; while the market capitalisation declined to N9.358 trillion from N9.419trillion; a loss of about N61billion.
Similarly, all other Indices finished lower during the week in review, with the exception of the NSE Industrial Goods Index that gained 0.66% while the NSE Alternative Securities Market (ASeM) Index closed flat.
As weak economic activity continues to cast a shadow on future profits, there was downward force on equities for most part of last week, as investors continued to focus on near-term outlook for the market.
The Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) increased the Monetary Policy Rate (MPR) by 200basis points to 14% in a bid to dampen the FX pass-through and attract foreign investment inflows.
As the nation’s future revenue from oil remains bleak, foreign investors who hitherto were big buyers at the nation’s bourse are still showing less interest in equities and other naira assets classes on concerns about real returns for their investments.
Recall that total foreign portfolio investment (FPI) transactions in the six months to June 2016 decreased by 54.29%, from N588.99billion recorded same period in 2015 to N269.22billion, recent data on domestic and foreign portfolio participation in equity trading showed.
Total transactions for the first half of the year decreased by 43.95% from N1.113trillion recorded in 2015 to N624.41billion in 2016.
“We anticipate another bearish run for equities this week, even as positive triggers remain scarce. Furthermore, we think July headline Consumer Price Index (CPI) likely to print higher year-on-year (y/y) relative to June also creates another reason for investors to move capital to safety, further re-enforcing our downbeat outlook for the equities market this week.
“While our prognosis for equities market remains bearish for the week, we still expect to see some pockets of demand mostly from investors with a long-term horizon” said research analysts at Lagos-based United Capital plc.
Only eighteen (18) equities appreciated in price last week, lower than twenty-two (22) equities in the preceding week. Thirty-eight (38) equities depreciated in price, lower than forty (40) equities in the preceding week, while one hundred and twenty four (124) equities remained unchanged higher than one hundred and eighteen (118) equities recorded in the preceding trading week.
Not a few market watchers noted that after the lackluster performance last week, the equity market opened this week to some volatility amid battered breath, but eventually closed in the green on the back of gains in select large cap blue chips as investors took strategic position on selected tickers.
Market analyst at Vetiva Capital who noted that Nigerian equity market traded largely in negative territory in the past week said they expect the market to continue its topsy-turvy pattern in the week ahead.
“As economic recovery in the near term remains vague, the Nigerian Bourse may continue in the bearish territory this week” said research analysts at Lagos-based investment house, Dunn Loren Merrifield.
Iheanyi Nwachukwu
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