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Floor of the Nigerian Stock Exchange

NSE Index drops by 1.8% despite CBN’s MPR cut

Floor of the Nigerian Stock Exchange
Floor of the Nigerian Stock Exchange

The decision by the Central Bank of Nigeria (CBN)  to cut the Monetary Policy Rate (MPR) from 13 per cent to 11 per cent  failed to lift the Nigerian equities market last week as the market closed in the red taking the while Year-to-Date (YTD) decline to 20.31 per cent.

The CBN ended its Monetary Policy Committee (MPC) meeting in Abuja last week with a resolution to reduce MPR, which is the benchmark lending rate, from 13 per cent to 11 per cent. The CBN Governor, Mr. Godwin Emefiele, who announced the resolution of the Committee at the end of its meeting, also said members agreed to cut down on Cash Reserve Ratio for public and private sectors from 25 to 20 per cent.

Analysts and stakeholders had hoped that rates cut will force savers to move their monies to the stock market. Although the market rebounded day after the cut, that positive performance could not be sustained. The market bowed to sell pressure that was triggered by investors’ apathy that has reigned for some time.

During the week, the prevailing negative sentiments were reflective of the uncertainties that have largely overshadowed the markets all through 2015.

The market was volatile in four trading days of the week.

At the close of trades last week, the Nigerian Stock Exchange (NSE) All-Share Index(ASI) depreciated by 1.83 per cent and 1.81 per cent to close the week at 27,617.45 and N9.495 trillion respectively.

Similarly, all other indices finished lower during the week, except the NSE Insurance index, while NSE ASeM Index closed flat.

The market had the previous week dipped by 2.46 per cent after five consecutive days of negative returns which saw just eight stocks out of 37 covered ending the week positive. This pushed the market’s YTD return to -18.83 per cent.

The bears maintained their grip on the equity market at the resumption of trading last Monday despite the significant increase in the value of stocks traded. Consequently, the ASI depreciated by 1.10 per cent to close at 27,820.49, compared with the depreciation of 0.26 per cent recorded the previous Friday.

The depreciation recorded in the NSE ASI on the day could be attributed to the losses recorded in the share prices of Guinness Nigeria Plc, Nigerian Breweries Plc, Guaranty Trust Bank Plc, Access Bank Plc, and Zenith Bank Plc amongst others. Similarly, the market capitalisation depreciated by 1.10 per cent to close at N9.56 trillion, compared with the depreciation of 0.25 per cent recorded the previous Friday to close at N9.67 trillion.

The market was down again on Tuesday. The market only rose by 0.03 per cent before declining 0.89 per cent with a market capitalisation of N9.49 trillion at close of trade. Although negative investor sentiment continued to burden the NSE ASI, market activity increased as both trade volume and value rose by 14 per cent and 38 per cent to 176 million units and N3.06 billion, respectively as the 3,011 deals took place, compared to 2,663 the previous day. All sectors closed negative on the day with the industrial sector the worst performer, down 1.57 per cent driven by Dangote Cement Plc (2.47 per cent).

The appreciation recorded in the prices of some highly capitalised stocks on Wednesday prevented the NSE ASI from hitting a new year low. The shares of Dangote Cement Plc and Guaranty Trust Bank Plc were primarily responsible for the upturn in the value of the Index. The NSE ASI appreciated by 0.53 per cent to close at 27,743.92 , compared with the depreciation of 0.80 per cent recorded the previous day. Other stocks that contributed to the appreciation recorded in the NSE ASI are: Access Bank Plc, Nigerian Breweries Plc and Diamond Bank Plc. Similarly, the market capitalization appreciated by 0.53 per cent to close at N9.54 trillion, compared with the depreciation of 0.79 per cent recorded the prior day to close at N9.49 trillion.

The equities market ended Thursday negative after the prior day’s positive return. NSE ASI was down 0.17 per cent with a market capitalisation of N9.52 trillion. Market activity was down as both volume and value declined by 17.8 per cent and 15.5 per cent, respectively. However, there was an increase in the number of deals, rising to 2,625 from 2,408 the previous day. Consumer goods sector produced the highest return in the market, rising by 0.72 per cent aided by gains in Unilever Nigeria Plc (2.65 per cent). The banking sector was the worst performer in the market shedding 1.53 per cent driven by declines in Guaranty Trust Bank Plc (4.50 per cent), Stanbic IBTC (2.78 per cent) and Zenith Bank Plc (1.82 per cent).

The appreciation recorded in the shares of FBN Holdings Plc and Unilever Nigeria Plc could not lift the Index last Friday as the bears maintained their hold on the equity market. Consequently, the NSE ASI depreciated by 0.29 per cent to close at 27,617.45 points. The depreciation recorded in the NSE ASI could be attributed to the losses in the share prices of Guaranty Trust Bank Plc, Dangote Cement Plc, UACN Plc, Guinness Nigeria Plc and Zenith Bank Plc. Similarly, the market capitalisation depreciated by 0.29 per cent to close at N9.50 trillion, compared with the depreciation of 0.17 per cent recorded the prior day to close at N9.52 trillion.

Meanwhile, a turnover of 1.041 billion shares worth N13.007 billion in 13,407 deals were traded last week by investors on the floor of the exchange in contrast to a total of 793.557 million shares valued at N7.152 billion that exchanged hands the previous week in 12,831 deals.

The Financial Services Industry led the activity chart with 857.050 million shares valued at N6.772 billion traded in 7,916 deals; thus contributing 82.36 per cent and 52.06 per cent to the total equity turnover volume and value respectively.

The Consumer Goods Industry followed with 64.553 million shares worth N4.217 billion in 2,479 deals. The third place was occupied by the Conglomerates Industry with a turnover of 62.745 million shares worth N585.655 million in 638 deals.

Also traded during the week were a total of 49,895 units of Exchange Traded Products (ETPs) valued at N916,710.90 executed in 38 deals, compared with a total of 2,143 units valued at N1.734 million transacted the previous week in 35 deals.

A total of 8,262 units of Federal Government Bonds valued at N9.151 million were traded last week in 7 deals. There was no transaction recorded the previous week.

In terms price movement, a total of 21 equities appreciated in price during the week, higher than 19 equities of the preceding week. Forty-one equities depreciated in price, same as the number of equities that declined in the previous week, while 128 equities remained unchanged, lower than 130 equities recorded in the preceding week.

The top 10 gainers were: Unilever Nigeria Plc (N3.52), PZ Industries  Plc (88 kobo),  FBN Holdings Plc (45 kobo),  Ikeja Hotel Plc (40 kobo), Portland Paints Plc (32 kobo), Caverton Offshore Plc, E-Tranzact Plc (22 kobo apiece) FCMB Group Plc (nine  kobo), Cutix Plc (seven kobo),  and United Capital Plc ( five kobo).

Conversely, the top 10 losers included: Stanbic IBTC Plc (N1.23), Zenith Bank Plc (N1.10), Oando Plc (50 kobo), Tiger Branded Consumer Goods Plc (33 kobo apiece),  Honeywell Plc (22 kobo), Diamond Bank Plc (18 kobo), Eterna Plc (15 kobo), May & Baker Plc (11 kobo) and  Learn Africa (five kobo).

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