NSE: Equities record marginal decline, trend to continue if….

By Chioma Obinagwam

The Nigerian Stock Exchange (NSE) measurement indicators- the NSE All-Share index and Market Capitalisation recorded a 0.12 per cent decline each to settle at 40,763.93 basis points and N14.72 trillion respectively at the close Monday’s trading.

An All-Share index is a series of numbers which shows the changing average value of the share prices of all companies on a stock exchange, also used as a measure of how well a market is performing whereas Market Capitalisation is the market value of a company’s outstanding shares. This figure is found by taking the stock price and multiplying it by the total number of shares outstanding.

Although the decline began at the end of last week, Stockbrokers and Analysts have attributed the decline to dearth of price sensitive information.

Price sensitive information is among the factors that influence investors behaviour and decisions in the market place.

Reacting to the performance of the Nigerian bourse (NSE), leading Stockbroker and Managing Director(MD) of Highcap Securities limited stated in a telephone interview: “Generally, the market trended down because we don’t have price sensitive information moving the market up. That is why investors’ demand has been declining and when investors’ demand declines, price goes down until there’s price sensitive information that can positively affect the market again. That is what happened.”

This implies that the lull in the market may persist until there is price sensitive information that is strong enough to trigger a rebound and upbeat of the market.

Meanwhile, data mined from the Daily Official list of NSE for the review period (April 23, 2018) showed that Continental Reinsurance Company, Unity Bank and FlourMills Nigeria Plc. topped the price losers’ table.

Continental Reinsurance led other price losers, shedding 9 kobo or 5.14 per cent from its N1.75 opening price to settle at N1.66.

This indicates that each shareholder of the company lost 9 kobo from the value of each of its shares at close of Monday’s trading.

Unity Bank followed with a 6 kobo or 4.72 per cent loss in its share price to close at N1.21 even as FlourMills Nigeria shaved N 1.65 or 4.69 per cent to close at N33.55.

Adonri further explained that these equities recorded losses in their share prices not because their fundamentals are weak but due to price correction.

Price correction usually happens when a share price that has recorded consistent gains over a period begins to decline due tolow demand for the stock to enable it achieve an equilibrium(balance or stability).

“The market goes up and down. Notwithstanding the fact that those stocks lost, their fundamentals are still strong. For instance, Continental Reinsurance declared dividend of I think, about 14 kobo, which is very very impressive,” he buttressed.

“We are still expecting the full year report for FlourMills but the third quarter report was impressive. So, what happened is that a few days ago, soon after those results were released, the demand for those stocks were very very high and so the market reaction was positive to results released but market does not react forever.
After a while, market reaction comes to an end and then stocks starts to suffer from what we call fatigue. Price decline will occur leading to the decline in such stock,” Adonri continued.

However, Learn Africa and Transnational Corporation of Nigeria (Transcorp) made it to the top of the gainers’ table.

Learn Africa notched 11 kobo or 9.17 per cent to close at N1.31, coming on the heels of its proposed 14 kobo dividend per share to shareholders of its company.

Transcorp closed 13 kobo or 7.98 per cent better after the board of the company disclosed its intentions to pay 2 kobo dividend to its shareholders (subject to approval at their Annual General Meeting).

Moreover, a total of 24 equities occupied the lossers’ table whereas a 19 equities notched the gainers’ side.

Although Afrinvest (an investment and financial advisory firm) has forecast that the market would perform positively this week, this will be achievable if price sensitive information positive and strong enough to swing the pendulum of the market in the upward direction

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