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Nigerian stock market on a flawless bullish run, crude oil boost triggers rally

55 equities appreciated in price during the week, higher than 32 equities in the previous week. 8 equities depreciated in price.

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Blue Chip stocks that defied COVID-19

A total turnover of 1.718 billion shares worth N18.849 billion in 26,367 deals were traded this week by investors on the floor of the Exchange, in contrast to a total of 926.418 million shares valued at N9.768 billion that exchanged hands last week in 20,910 deals.

The Financial Services industry (measured by volume) led the activity chart with 1.273 billion shares valued at N11.362 billion traded in 13,808 deals; thus contributing 74.08% and 60.28% to the total equity turnover volume and value respectively.

The Industrial Goods industry followed with 102.377 million shares worth N3.194 billion in 2,956 deals. In the third place was the Healthcare industry, with a turnover of 99.620 million shares worth N493.348 million in 1,194 deals.

READ MORE: Nigerian billionaires lose billions amid COVID-19 pandemic

Trading in the top three equities, Zenith Bank Plc, Access Bank and FBN Holdings Plc (measured by volume), accounted for 673.104 million shares worth N6.803 billion in 5,927 deals, contributing 39.18% and 36.09% to the total equity turnover volume and value respectively.

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The NSE All-Share Index and Market Capitalization both appreciated by 5.59% to close the week at 25,204.75 and N13.136 trillion respectively.

55 equities appreciated in price during the week, higher than 32 equities in the previous week. 8 equities depreciated in price, lower than 28 equities in the previous week, while 100 equities remained unchanged, lower than103 equities recorded in the preceding week.

Top 10 gainers for the week

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UNILEVER NIGERIA PLC up 33.86% to close at N17.00.

RED STAR EXPRESS PLC up 26.67% to close at N3.80.

BUA CEMENT PLC up 23.42% to close at N39.00.

11 PLC up 20.92% to close at N213.90.

U A C N PLC up 20.14% to close at N8.35.

VITAFOAM NIG PLC. up 20.00% to close at N6.00.

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CUTIX PLC up 19.85% to close a to close at N1.63.

C & I LEASING PLC up19.57% to close at N5.50.

AIICO INSURANCE PLC up 19.54% to close at N1.04.

NEIMETH INTERNATIONAL PHARMACEUTICALS PLC up 19.44% to close at N0.86.

Top 8 losers for the week

ARBICO PLC down 9.91% to close at N2.09.

AFROMEDIA PLC down 9.68% to close at N0.28.

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ROYAL EXCHANGE PLC down 9.09% to close at se at N0.20.

LASACO ASSURANCE PLC down 7.41% to close at N0.25.

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CORNERSTONE INSURANCE PLC down 6.78% to close at N0.55.

NESTLE NIGERIA PLC. down 4.33% to close at N995.00.

MAY & BAKER NIGERIA PLC down 1.92% to close at N3.06.

NIGERIAN AVIATION HANDLING COMPANY PLC down 1.64% to close at N2.40.

READ MORE: Investors support AIICO to raise capital through Rights Issue

Outlook

The Nigerian stock market finished the week with a five days of consecutive winning, coupled with buying pressures for blue-chip stocks.

This was triggered by soaring crude oil prices which remained bullish, on the 4th week of consecutive gains. As COVID-19 induced restrictions globally eased, demand for Nigeria’s major export (crude oil) picked up.

Nairametrics, recommends that you solicit the service of a certified financial advisor, as volatility will most likely resume in the coming weeks. Happy holidays!

Olumide Adesina is a French-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment Trading. Member of the Chartered Financial Analyst Society. Behavioral Finance, Duke University. You can follow Olumide on twitter @tokunboadesina or email [email protected]

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Commodities

Oil prices propel above $40/barrel but bulls prospect remains weak

Brent crude (LCOc1) was up 0.41% to trade at $42.11 a barrel by 0706am GMT.

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Crude oil prices surge, as China plans to import large volumes of U.S. crude

Crude oil prices rallied higher on Friday at the opening of London’s trading session.

The black liquid is on track for a weekly decline because of rising concerns about the global resurgence of COVID-19 infections and its effects on fuel demand, while additional supplies from Libya continue to weaken oil bulls’ prospect.

Brent crude is heading for a price decline of around 2.5% this week with WTI also on track for a price fall of about 1.5%. Both benchmarks are also heading for a monthly decline, which would be the first for Brent in six months.

What we know; Brent crude (LCOc1) was up 0.41% to trade at $42.11 a barrel by 0706am GMT, while U.S. West Texas Intermediate (WTI) crude (CLc1) gained 0.42% to trade at $40.48.

Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to Nairametrics spoke on the price movement of crude oil with prevailing macros affecting the price.

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Saying, “Oil prices bounced overnight as investors turned optimistic that the US Congress may resume stimulus discussions that have been stuck in the swap. Lawmakers were all ears after a chorus of US Federal Reserve committee members were again at pain to point out the need for additional fiscal support. And cries from the world’s top central banker Jerome Powell struck a chord during this week’s testimony to Congress and the Senate. Lawmakers in contentious election battles can ill afford the negative press around Congress’ dithering during the next 6-week election run-up. A US stimulus package pre-November election is very much underpriced and could be a significant catalyst for oil’s demand function and could punch prices higher.”

However, supply-side dynamics are quite more encouraging than before and should get reflected in a strong downtrend in inventories over the next few months

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Currencies

Naira stabilizes across forex markets, as BDCs get another round of dollar allocation

The Naira remained stable against the dollar to close at N467/$1 on Thursday.

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FOREX, NAFEX market turnover drop by 59%, Naira crashes to N470/$1 as currency uncertainty worsens 

Forex turnover improved by 43% as Nigeria’s exchange rate at the NAFEX window stabilized to close at N386/$1 during intraday trading on Thursday, September 24.

Also, the naira remained stable, closing at N467/$1 at the parallel market on Thursday, September 24, 2020, after another round of forex allocation to BDC operators by CBN.

Parallel market: At the black market where forex is traded unofficially, the Naira remained stable against the dollar to close at N467/$1 on Thursday, according to information from Abokifx, a prominent FX tracking website. This was the same rate that it was exchanged for on Wednesday, September 23.

Currency developments

  • The local currency has strengthened by about 7.8% within the last one week at the black market, as the CBN introduced some measures targeted at exporters and importers, in order to try to boost the supply of dollars in the foreign exchange market, and reduce the high demand for forex by traders.
  • The CBN has sold over $200 million to BDCs since the resumed forex sales on Monday, September 7, 2020. This was expected to inject more liquidity to the retail end of the foreign exchange market, and discourage hoarding and speculation.
  • However, the exchange rate against the dollar has failed to sustain the initial gains made, after the CBN announced plans to provide liquidity.
  • BDC operators have urged the apex bank to reconsider the margin allowed for the currency traders, as it was inadequate to meet their expenses.
  • We also noted that forex traders monitored during the previous week, appeared to hoard forex, as they anticipated further depreciation in the market.
  • There has been a drop in speculative buying of foreign exchange, although demand backlog by manufacturers and foreign investors still puts pressure, and creates a volatile situation in the foreign exchange market.

NAFEX: The Naira remained stable against the dollar at the Investors and Exporters (I&E) window on Thursday, closing at N386/$1.

  • This was the same rate that it exchanged for on Wednesday, September 23.
  • The opening indicative rate was N386.13 to a dollar on Thursday. This represents a 31 kobo gain, when compared to the N386.44 to a dollar, that was recorded on Wednesday.
  • The N390.34 to a dollar is the highest rate during intraday trading, before closing at the rate of N386/$1. It also sold for as low as N383/$1 during intraday trading.

Forex turnover: Forex turnover at the Investor and Exporters (I&E) window, increased by 42.6% on Thursday, September 24, 2020.

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  • According to the data tracked by Nairametrics from FMDQ, forex turnover rose from $69.22 million on Wednesday, September 23, 2020, to $98.65 million on Thursday, September 24, 2020.
  • The CBN had in the past few weeks moved to clear the huge backlog of foreign exchange demand, especially by foreign investors wishing to repatriate back their funds.
  • The improvement in forex supply after yesterday’s drop, reinforces the volatility of the foreign exchange market. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.
  • The average daily forex sale for last week was about $34.5 million, which represents a drop from the $58.52 million that was recorded the previous week.
  • Total forex trading at the NAFEX window in the month of August was about $857 million, compared to $937 million in July.
  • In the latest report on Monetary, credit, foreign trade, and exchange policy guidelines for fiscal year 2020/2021, the CBN lamented that forex market pressure, which is as a result of speculative activities in the BDC and I & E segments of the foreign exchange market, is expected to exert more pressure on the naira exchange rate.

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Cryptocurrency

Unknown entity transfers $166 million worth of Bitcoins

BTC whale moved 15,987 BTC in block  649,777 estimated to be worth about $ 166 million.

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The number of transactions done by large entities in the world’s most important crypto market is on the rise.

Data obtained from Bitcoin Block Bot, a crypto analytic tracker, revealed that a BTC whale moved 15,987 BTC in block  649,777, estimated to be worth about $166 million, recently.

 

BTC whales have been moving large stacks of BTCs lately, triggered by the third BTC halving that occurred some months ago.

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Much of the recent increase can be attributed to wealthy entities withdrawing their BTCs from crypto exchanges. Apparently, this is not new wealth; rather, it represents a change in the way Bitcoin whales are choosing to hold their coins.

From a macro level, the increase in the number of these large entities can be considered bullish.

At the time this report was drafted, Bitcoin was still trading around the $10,500 support levels, as investors have kept buying BTC at its support levels.

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Quick fact: At the BTC market, investors or traders who own large amounts of bitcoins are typically known as Bitcoin whales. This means that a BTC whale would be an individual or business entity (with a single Bitcoin address) owning around 1000 Bitcoins or more.

As BTC whales accumulate BTCs, Bitcoin’s circulating supply reduces, and this can weaken any bearish trend bitcoin finds itself in.

Meaning that over time, it’s possible that as BTC approaches its fixed supply of 21 million, the price of BTC will go up, with BTC’s present demand factored in.

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