By Nkiruka Nnorom
After closing the year 2020 on a very high note, investment experts have said that the bulls dominance in the stock market would be sustained in the first quarter of the year (2021) following positioning by investors ahead of the release of 2020 full year financial statements.
According to them, the buy pressure from investors seeking to reap from dividends as well as N822 billion inflows from the money market would impact the market positively.
Commenting, analysts at Cowry Asset Management, said: “In the new week, we expect the local equities market to sustain its bullish momentum as investors further position in dividend paying stocks ahead of the corporate action period. Also, we expect the huge maturing Open Market Operation (OMO) bills worth N822.08 billion to impact the equities market positively as liquidity flow in amid low auction by CBN.”
In their own views, analysts at Cordros Capital, said: “In the first trading week of the new year, we expect the bulls to retain their dominance as buying activities due to positioning for FY 2020 dividends will likely suppress selling activities.”
Meanwhile, the market had recorded strong gains in all the three trading days in the last week of 2020 on account of buy interest in some blue chip stocks.
Consequently, the All Share Index (ASI) rose above 40,000 marks for the first time since May 23, 2018, to close at 40,270.72 points. This represents 3.8 percent week-on-week (w/w) returns, driven by buying interest in BUA Cement (+28.9%), MTN Communication Nigeria Plc (+6.2%), United Bank for Africa (UBA) (+2.4%), and Zenith Bank Plc (+1.2%).
Accordingly, the Month-to-Date (MtD) return rose to 14.9 percent, while the Year-to-Date (YtD) return closed at 50.02 percent, thereby outperforming the 42.3 percent gain recorded in 2017.
Similarly, investors’ wealth rose by N778 billion to N21.057 trillion from N20.279 trillion at the beginning of the week, representing 3.8 percent increase.
Activity level was, however, weak, partly reflective of the shortened trading week, as volume and value declined by 34.5 percent w/w and 35.6 percent w/w respectively.
Analysis of the sectoral performance showed that activity mixed with the banking and the consumer goods sectors declining by 0.6 percent and 0.5 percent respectively.
Conversely, the industrial goods, insurance and the oil and gas sectors advanced by 10.4 percent, 1.7 percent and 0.2 percent respectively.