Equities Investors Gain N6.3Trn as NGX Hits ‘Overbought’
Equities investors in the Nigerian stock market saw its largest weekly gain of about N6.3 trillion amidst a sustained rally. This local exchange peaked ahead of the earnings festival for the financial year 2023. Bargain hunting has been strong despite economic conditions.
In an update, stock market analysts at Cowry Asset Limited stated that the All-share index’s current movement pattern indicates that the market is persistently in the overbought region according to the relative strength index (RSI).
The Investment noted that stock valuations and prices have significantly exceeded intrinsic values. This signals a potential, imminent pullback, suggesting the market requires a correction in the short term”, Cowry Asset Limited told investors in its market update.
MarketForces Africa reported that the continuous buying interest lifted key performance indicators to all-time highs with an expectation that there will be a pullback as NGX hits the overbought region.
The local exchange has been breaking new ground consistently following improved investors’ sentiments despite weak macroeconomic indicators. The market is currently moving in stark contrast to economic dictate amidst the ongoing re-rating of listed companies’ stocks.
Data from the Exchange showed that the market index or all share index recorded a substantial 13.84% week-on-week gain, closing at 94,538.12 points. Stockbrokers are predicting that the local bourse will also break the next resistance level as companies are expected to release Q4 earnings results.
This remarkable surge was underpinned by continued funds inflow, reflecting portfolio repositioning in response to recent macroeconomic data indicating nearly a three-decade high in consumer price inflation, Cowry Asset Limited told investors in a note.
Stockbrokers explained that despite below-average traded volumes, several tickers reached new 52-week highs. As a result, the year-to-date return strengthened to 26.43%, up from 11.06% the previous week.
The sectoral performance came strong as indices closed in the green except for the banking index which retreated by 0.12% week-on-week. The decline was attributed to negative price movement registered by FBNH, GTCO, and STANBIC.
In contrast, the Industrial index outperformed, gaining 46.88% week-on-week, driven by price increases and buy interest in DANGCEM, BUACEM, and LAFARGE. The Insurance, Oil & Gas, and Consumer Goods Indexes closed the week on a bullish note, rising by 14.94%, 8.82%, and 8.18%, respectively, according to stockbrokers market update.
Market analysts explained that the surge in these indices was propelled by positive price movements in NEM, HONYFLOUR, MAYBAKER, ETERNA, and SEPLAT. Despite the market’s positive performance, participation levels weakened compared to the previous week, Cowry Asset Limited stated in its market update.
Details obtained from the Nigerian Exchange showed that total traded volume declined by 9.44% to 5.18 billion units, while the number of trades dipped by 1.31% to 79,012 deals. Value traded on the exchange was down by 12.42% to N77.80 billion.
Top-performing stocks at the week’s close included The Initiates (60%), DANGCEM (54%), HONYFLOUR (51%), MAYBAKER (51%), and BUACEM (46%). ROYALEX, MORISON, IKEJAHOTEL, FBNH, and GTCO faced declines in their share prices, shedding 22%, 17%, 11%, 5%, and 5%, respectively. Nigeria Eurobond Slumps after CBN Resumes OMO Auction
“The All-share index current movement pattern indicates that the market is persistently in the overbought region according to the RSI, with stock valuations and prices significantly exceeding intrinsic values. This signals a potential, imminent pullback, suggesting the market requires a correction in the short term”, Cowry Asset Limited told investors in its market update.
Overall, equities market capitalisation advanced by N6.29 trillion in 5 days to N51.74 trillion.
