Bears halt three-day bullish run on Nigerian bourse

The Nigerian equities market halted its three-day bullish run, as the benchmark index declined by 0.16 per cent to 32,121.74 points, following selloffs across major Banking and Oil & Gas stocks.

Thus, the Month-to-Date and Year-to-Date returns increased slightly to 1.27 per cent and 2.20 per cent, respectively.

Gains in the Banking (+0.03%) and Insurance (+0.02%) indices were not enough to offset losses in the Oil & Gas (-1.73%), Industrial Goods (-1.35%), and Consumer Goods (-0.05%) indices. Notable stocks include, GUARANTY (+0.93%), CHIPLC (+7.69%), CCNN (-5.00%), SEPLAT (-3.57%), and GLAXOSMITH (-3.57%), respectively.

Market breadth was negative, with 19 losers and 8 gainers, led by ETRANZACT (-9.90%) and CHIPLC (+7.69%) shares, respectively. Total volume of trades declined by 48.0% to 208.60 million units, valued at NGN2.78 billion, and exchanged in 3,246 deals.

“The still tense political environment guides our view of cautious trading in short term. However, attractive valuations and stable macroeconomic fundamentals provide scope for sustained market recovery in the medium-to-long term”, analysts at Cordros Capital said.

In the currency market, USD/NGN appreciated by 0.16 per cent to NGN360.19 in the I&E FX window, but closed flat at NGN360.00 at the parallel market.

Total turnover in the IEW declined significantly by 90.4 per cent to USD91.66 million, with trades consummated within the NGN355.00-NGN362.50/USD band.

In the fixed income and money market, the overnight lending rate declined further by 67 bps to close at 9.75 per cent, with liquidity still relatively buoyant, and in the absence of an OMO auction.

Proceedings in the NTB market were bearish, as average yield widened by 3 bps to 13.34 per cent. There was sell pressure across the short (+10 bps) and mid (+10 bps) segments, with the yield on the 71DTM (+271 bps) and 183DTM (+49 bps) bills recording respective expansions. Conversely, yield at the long (-1 bp) end of the curve contracted marginally, driven by demand for the 232DTM (-31 bps) bond.

Trading in the bond market was mixed, albeit with a bearish bias, as average yield rose by 2 bps to 14.22 per cent. Sell pressure was concentrated at the short (+7 bps) end of the curve, with yield on the JUN-2019 (+24 bps) bond recording a significant expansion.

Conversely, a demand for the JUL-2034 (-3 bps) led to yield contraction at the long (-1 bp) end of the curve. Yield at the mid segment was flat.