Bearish sentiments persisted in the Nigerian equities market as the benchmark index dipped by 0.71% to 32,244.24 points, weighed by selloffs across Tier I banking and major Consumer Goods stocks.
Accordingly, the Month-to-Date and Year-to-Date returns moderated slightly to 5.52% and 2.59%, respectively.
On sectoral breakdown, all sectoral indices – save for the Insurance (+0.08%) index – closed in the red, with the Oil & Gas (-1.65%), Banking (-1.44%), Consumer Goods (-0.66%),and Industrial Goods (-0.05%) recording declines. Notable stocks include CORNERST (+4.55%), OANDO (-9.66%), ZENITHBANK (-3.49%), UNILEVER (-4.65%), and WAPCO (-0.38%), respectively.
Elsewhere, market breadth was negative, with 10 gainers and 30 losers, led by NEIMETH (+9.84%) and UNIONDAC (-9.68%) shares, respectively. Total volume of trades rose by 41.6% to 456.07 million units, valued at NGN2.68 billion, and exchanged in 5,416 deals.
As the market continues to digest election results, we guide investors to trade cautiously in the short term. However, stable macroeconomic fundamentals and compelling valuations remain supportive of recovery in the mid-to-long term.
The naira traded flat against the dollar at NGN360 in the parallel market, while it appreciated slightly by 0.09% to NGN361.18 in the I&E FX window. Total volume of trades in the IEW surged by 380% to USD354.88 million in yesterday’s session, with trades consummated within the NGN320.00-NGN362.50/USD band.
FIXED INCOME AND MONEY MARKET
The overnight lending rate declined further by 413 bps to close at 10.58% — lowest since Jan 30 2019 – as the CBN once again refrained from conducting an OMO auction.
Proceedings in the NTB market were significantly bullish, as average yield moderated by 50 bps to 13.45%. Buy sentiment was spread across the short (-30 bps), mid (-22 bps) and long (-66 bps) end of the curve, with yield on the 29DTM (-238 bps), 148DTM (-120 bps) and 239DTM (-126 bps) bills recording the most significant contractions. At today’s primary action, the CBN fully allotted NGN115.12 billion worth of bills – NGN24.37 billion of the 91-day, NGN38.75 billion of the 182-day and NGN52.00 billion of the 364-day – at respective stop rates of 10.90% (previously 10.97%), 13.01% (previously 13450%), and 14.37% (previously 14.95%). Stop rates moderated by an average of 35 bps following significant oversubscription, with auction recording a bid-cover of 6.32x (vs. 2.86x previously).
Trading in the bond market was also bullish, as average yield compressed by 23 bps to 14.23%. All segments – short (-20 bps), mid (-18 bps), and long (-37 bps) – recorded significant demand, with respective yields on the FEB-2020 (-60 bps), MAR-2024 (-37 bps) and JUL-2034 (-47 bps) bonds recording the largest contractions.