Stocks start week red, extend losses as investors remain pessimistic

The equities market closed yesterday on a negative note, as Nigerian Stock Exchange [NSE] All Share Index [ASI] depreciated by 0.28 peer cent to close at 32,447.05basis points, compared with the 0.61 per cent depreciation recorded previously.

Its Year-to-Date (YTD) returns currently stands at 6.38 per cent Market breadth also closed negative as Neimeth led 21gainers against 31losers topped by Uacn at the end of yesterday’s session- an unimproved performance when compared with previous outlook. Market turnover however closed positive as volume moved up by 25.80 per cent against 25.80 per cent decline recorded in the previous session.

Access, UBA and Diamond were the most active to boost market turnover. Zenith Bank and Nigerian Breweries topped market value list. Volume shockers included Transexpr which led the list of active stocks that recorded impressive volume spike at the end of yesterday’s session. Meanwhile, lack of policy direction has been attributed to the slow economy amidst naira volatility.

Bullish sentiment at the early trading sessions of last week was short lived after the month end portfolio repositioning and window dressing by fund managers.

This was in addition to negative sentiments in the global financial market as Greece’s defaulted in repayment of its debt to the International Monetary Fund (IMF) and subsequently the suspension of Eurozone bailout for trouble nation. Back home, Nigeria’s deepening debt profile and a seeming lack of clear direction as to where the economy is heading, as the government remains silent on its economic reforms policy agenda has slowed down business activities, having kept investors waiting on the sideline.

Proshare analysts called for urgent attention of the disintegrating economic fundamentals of the nation at this current time. They call on the government and its agencies to put measures and indeed take step to savage the situation, to build the formidable capital that would drive the expected growth and development of Nigeria’s economy to deliver the prosperity promised for all.

According to them, the socio- political and economic factors needed to chart a new course for this nation should be put place, instead continually shifting the goal post.

The equity Market reversed southward last week, as prices remained in the negative territory due to highly capitalized stocks suffered price losses as a result of profit taking activities of wary investors. The market’s composite Index and Market capitalization dropped 0.96 percent to close at 32,538.34 and N11.11trillion respectively.

The prevailing negative sentiment has further pushed the year to date returns of the market deeper into negative territory at 5.58 percent.

The market momentum remains bearish as more equities closed in the red to reflect weak market that had dominated trades in last 15 trading sessions.

As the index trades below its shortest moving average of 20 days, signaling oversold region, which suggests that reversal is imminent, especially now that half year scorecards have started rolling in with Infinite Trust Mortgage Bank been the first to release its second quarter earnings report to the market.

The ASI rallied 1.84 percent in the first two trading days of week bouncing back to the 33,000 points before shedding 2.74 percent due to sells pressure on the part of the retail investors and market players. This just as fluctuation in the Naira against international currencies increase the risk in equities trading.

The volume of transactions and value for the week dropped by 15 percent and 37 percent respectively relative to the levels recorded in the previous trading week as more investors and traders applies caution as the economy continued to slow down. At the close of trading activities last week, 1.22 billion shares valued at N16.75 billion were exchanged in a higher number of deals of 18,497 compared with 1.44 billion shares valued at N26.41 billion exchanged in 17,679 deals recorded in the previous trading week.

Analysts however expect mixed trading sentiments as investors continue to keep their gaze on macro events in the country as the government has not given a clear economic policy direction that would guide investment decision of investing public.