Bears Maintain Hold at Stock Market, as Dollar Bows to Naira in All Segments

The stock market fell for the third consecutive time at the Nigerian Stock Exchange (NSE) today, as the naira continue to rally against the dollar in all three segments of the market as a result of the Central Bank of Nigeria (CBN)’s intervention.
The bears accelerated in the equities market as significant losses in big names like Nigerian Breweries, Guninness, Seplat Transcorp and adangote Cement resulted in the third consecutive negative session.
The NSE ASI fell by 2.21 per cent to close at 32,203.62 points, while Market Capitalization fell by N240.61 billion to close at N10.63 trillion. Today’s decline sent the benchmark index to its lowest value since the 31st of January 2013.
All of the five NSE sectoral indices reflected the negative sentiment in the market. The Consumer Goods index topped the losers’ chart with a 2.93 per cent drop, the Industrial index followed with a 2.34 per cent decline, while the Insurance index fell by 1.40 per cent. The Banking and Oil/Gas indices also performed poorly with depreciations of 1.28 per cent and 0.78 per cent respectively.
Market breadth remained poor with 34 laggards and only 13 gainers. Volume traded rose by 6.21 per cent to 376.20million shares, valued at N6.66 billion and traded in 4,230 deals.
We maintain our negative outlook going forward due to the mounting headwinds.
So far, the naira had appreciated against all the three currency pairs we track. The naira had gained 190bps on the Greenback to trade at N180.00/$. The CBN intervened in the inter-bank currency market and also sold $149.77million (out of $150million offered) at today’s official market auction. The local currency had also added 176bps and 119bps against the Pound and Euro respectively to trade at N282.41/£ and N224.34/€ in that order.
The average interbank rate fell by 409 basis points (bps) to 24.30 per cent. The over-night rate decreased by 1664bps, while the 1, 3 and 6-month NIBOR rates rose by nine bps on average. The expectation of N151.63 billion due to hit the system tomorrow through Open Market Operation (OMO) maturities drove rates lower.
Bullish trading returned to the treasury bills market as demand for majority of the maturities led to a 21bps contraction in average yield to 14.85 per cent. Despite the increased demand, the 15, 22, 106 and 127 DTM maturities posted yield expansions of 44bps, 30bps, 10bps and 60bps.
The bulls were also prevalent in the bond market where average yield contracted by to 13.76 per cent. to 13.76 per cent. A bulk of the demand was for the 0.37TTM maturity which posted a yield contraction of 59bps. However, the 1.68 and 9.26 TTM maturities posted yield expansions of 11bps and 10bps accordingly.

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