Anticipated improved corporate performance lifts NSE indices by 3.4%

Anticipated improved corporate performance lifts NSE indices by 3.4%

NSE trading floor. PHOTO: FEMI ADEBESIN-KUTI Expectations of improved corporate earnings, coupled with the outcome of the MPC meeting sustained positive sentiments on the equity sector of the Nigerian Stock Exchange (NSE) last week, as the market hit the N22 trillion mark, and the All-share index and market capitalisation appreciating by 3.442 per cent to close the week at 42,412.66 and N22.187 trillion, respectively.

Similarly, all other indices finished higher with the exception of NSE Oil/Gas ,which depreciated by 7.25 per cent while the NSE ASeM and NSE growth indices closed flat.

Analysts said the gradual release of corporate earnings spurred buying interests in dividend-paying stocks, which was further strengthened by the outcome of the MPC meeting.

The Chief Research Officer at Investdata Consulting, Ambrose Omordion, said: “The market finally broke out of the 42,000 psychological line, helped by the influx of unaudited corporate earnings offering an insight into what investors should expect from the 2020 December year-end audited earnings reports.

“This is in the midst of positive sentiments that have been helped by the decision of the Central Bank of Nigeria Monetary Policy Committee (MPC) to leave rates unchanged, following which funds continue to enter the market, as indicated by money flow index and sentiment report.

“Consequently, we advise that players should take advantage of breakouts to position in dividend-paying stocks, with numbers likely to beat expectations, given that the factors driving the rally remain intact. We note too that trading patterns are supporting mispriced stocks and high yield dividend-paying companies. However, let us not forget that profit taking and price correction are integral parts of stock market investing or trading.”

Analysts at Codros Capital also said: “With the outcome of the MPC meeting aligning with market expectations amid negative real returns in the fixed income market, we expect risk-averse investors to recalibrate their portfolio towards fundamentally sound stocks with attractive dividend yields.

“However, we advise investors to take positions in only fundamentally-justified stocks as the fragility of the macroeconomic environment remains a significant headwind for corporate earnings.”

A breakdown of the market performance last week showed that transactions on the equity sector of the Nigerian Stock Exchange (NSE) reopened upbeat on Monday, occasioned by bargain-hunting in some high capital stocks. The market capitalisation appreciated by N45 billion and the All-Share Index (ASI) grew by 86.97 absolute points or 0.21 per cent increase to close at 41,088.96 points. Also, the overall market capitalisation gained N45 billion […]

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