NSE: Market recovery is on top-gear as optimism remains resilient
Category: Capital Market
October 28, 2012 / Proshare Analyst
It is obvious that the full market recovery is very close to the coast as Nigerian stocks continued to extend the active bullish trend which started eight months back, putting the performance of the key benchmark indices above its peers in the region on the back of sustained optimism to close at29.64%.- the wheel of recovery is on top-gear
Furthermore, a cursory look into market performance so far in the year in parallel to previous four years performances on year-on-year basis reflects undeniable steady recovery trend- a better performance with healthy prospects as market is gradually erasing losses experienced in the previous years while regaining its breadth comfortably as market gyration and optimism maintained rigid northward postures, riding on sustained and growing investors’ commitment towards investment in equities.
In addition, according to extensive analysis as shown in the table above, we observed that market is increasingly and steadily erasing the previous losses when compared the current ASI position with high and low recorded in the year 2008- the year that market crashed, where investors’ confidence plunged significantly to zero level.
The market performance so far is a reflection of renewed and improved investors’ confidence which has led to the surge in foreign participation in the market despite sustained unbalanced monetary policies and attractive postures of the bond and money markets.
Though, the retail end of the market is yet to resume active participation, which has contributed immensely to the indecisive participants in the market due to low liquidity and weak purchasing power as brokers/dealers are still struggling with debts overhanging.
Nevertheless, Nigerian stocks have recorded approximately 30% appreciation, adding N2.03trillion to market net worth so far in the year- the best market performance since 2008/2009 market crash while further analysis revealed market to be in strong bullish mode with significant strength as revealed by market RSI of 62.81 as at October 24th 2012, peaking at 27,371.30 above 27,339.10- a 54months resistance level recorded on April 15th 2010.
In the year, the month of September experienced impressive rally, outperforming other months to boost the market performance so far in the year while February remained the worst performing month in the year.
The impressive performance cannot be isolated from concerted efforts and initiatives from both the management of the exchange, the regulators and other stakeholders which have given birth to improved regulatory oversight, compliance and transparency on the bourse. Also, the recent introduction of market-making on the Nigerian bourse contributed immensely to the recent optimism and active market participation while foreign investors dominated market activities.
NSE Sectoral Indices Performance
The NSE major sectoral indices revealed the concentration of bargain trend towards blue chips mainly in Consumer Goods and Banking sub-sector as suggested by the performances of the indices. Banking sub-sector led the table with 55.33% YTD appreciation while Oil & Gas closed as worst performing sector on the list.
Extensive analysis revealed that penny stocks received more patronage so far in the year as stocks below N5.00 dominated the top 10 performing stocks so far in the year, but on the gainers list both value and penny stocks are at par, holding market breadth firm. This technically suggests increased risk appetite and renewed investors’ confidence and commitment towards equities.