Again, the bulls maintained strong holds on the equity market on the Nigerian Stock Exchange on Thursday, as more investors took position on stocks, hoping for medium to long term earnings.
Specifically, the All Share Index recorded a gain of 2.18 per cent to close at 28,877.47 points, compared to the appreciation of 3.78 per cent recorded the preceding day to close at 28,260.61 points.
Market capitalization gained N211 billion to close at N9.917 trillion, compared to the rise of N354 billion recorded the preceding day to close at N9.706 trillion.
Consequently, the benchmark index recorded the highest level in the year 2016 bringing the year-to-date return to a positive region of 0.82 per cent.
The appreciation recorded in the share prices of Nestle, UBA, Zenith Bank, Nigerian Breweries and Lafarge Africa were mainly responsible for the gain recorded in the index.
The total value of stocks traded was N5.02billion, up 43.29 per cent from N3.50billion recorded the preceding day.
The total volume of stocks traded was 651million in 5,796 deals, while the three most actively traded stocks were UBA, Fidelity Bank and FBN Holdings.
Investment analysts at DLM Securities Limited attributed the remarkable improvement in market sentiments to the growing bid position and volume of trades.
“This in our view, suggest fund flows from emerging markets and institutional investors following the introduction of flexible exchange rate policy by the CBN.
“From a stock picking perspective, we continue to see great value when compared to other global markets, as price earnings ratios and other valuation measures are far from all-time highs, hence, we see meaningful scope for better performance going forward,” the firm stated.
It explained that with scope for revenue growth and margin recovery from a depressed level, value investors are buying future earnings and cash flow at a discounted price, focusing more on business fundamentals as a condition under which value investing can flourish.
From sector perspective, while investors are looking forward for a sustainable recovery in crude oil prices, the firm stated noted that the oil and gas stock valuations are still reflecting lots of pessimism despite the current deregulation of the downstream segment.
“Amid the strong bull market that has driven the ASI up to a positive region year-to-date and continues to produce gains, we believe now is a good time to invest. However, every bull market, such as the one we are experiencing, has bear shadow hanging over it.
“This explains the reason why many investors are not swayed by the current market gains. With this in mind, one might think that investors’ cautiousness about the market is warranted, given that the domestic economic is far from recovery,” it added.