NSE continues upward trend move as Index up 0.36% Thursday

Trading activities on The Nigerian Stock Exchange (NSE) was positive – for the third consecutive session – as the market All-Share Index (ASI) notched higher by 0.36 per cent to 30,989.60 points, driven by buying sentiments across major counters.

Set against the foregoing, the Month-to-Date loss declined marginally to 1.40 per cent.

On sectoral performance, the Banking (+0.65%), Oil & Gas (+0.13%), Insurance (+1.10%) and Consumer Goods (+0.01%) closed positive, on the back of gains across GUARANTY (+1.82%), OANDO (+1.06%), MANSARD (+7.53%) and HONYFLOUR (+4.88%) respectively. Meanwhile, the Industrial (-0.97%) closed in the red, driven by a benign performance in CCNN (-4.00%).

Market breadth was positive with 27 gainers and 20 losers, led by LEARNAFRICA (+9.92%) and MEDVIEWAIR (-9.76%) respectively. Elsewhere, total volume declined markedly by 28.8 per cent to 268.26 million, valued at NGN3.15billion, and exchanged in 3,752 deals.

“Our views on the equities market continues to favour cautious trading owing to heightening political concerns ahead of the 2019 elections and the absence of a positive market trigger”, analysts at Cordros Capital said.

In the foreign currency market, the USD/NGN appreciated by 0.04 per cent to NGN362.43 at the I&E FX window, while it depreciated by 0.27 per cent to NGN364.00 in the parallel market. Total turnover in the IEW declined by 73 per cent to USD90.99 million, with trades executed within the NGN360-365.5/USD band.

In the fixed income and money market, the overnight lending rate declined by 267 bps to 13.00 per cent, following inflows from matured OMO bills (NGN381.54 billion). The CBN mopped up NGN409.89 billion via OMO auction, selling NGN6.06 billion of the 91DTM, NGN18.38 billion of the 182DTM and NGN335.21 billion of the 364DTM, at respective stop rates of 11.90 per cent, 13.50 per cent and 15.00 per cent.

Trading in the treasury bills market was bullish, as average yield moderated by 3bps to 14.44 per cent.  Buy sentiment was concentrated at the short (-24 bps) segment, driven by demand for the 35DTM (-105 bps) bill. On the flip side, a selloff of the 294DTM (+42 bps) bill led to yield expansion at the long (+8 bps) end of the curve. Yield at the mid segment was flat.

Proceedings were bearish in the bond market, following the release of the Q1-2019 bond issuance calendar and the bond offer circular for January. The calendar indicates a NGN227 billion – NGN267 billion increase in planned borrowing, to NGN360 billion – NGN440 billion, compared to NGN133.34 billion sold in the previous quarter – strengthening the case for higher yields in the medium term.

The median amount planned (NGN400 billion) is 33 per cent higher than the offering in Q4-18 and 43 per cent higher than in Q1-18. It is also the highest quarterly offering since the NGN405 billion offered in Q3-17. As a result, as average yield rose by 11bps to 15.20 per cent. Yields widened at the short (+23 bps), mid (+1 bps) and long (+12 bps) segments amidst selloffs of the FEB-2020 (+59 bps), JAN-2026 (+12 bps) and MAR-2037 (+24 bps) bonds, respectively.