By FSDH Research
Monday, August 3, 2020
Market Insight: The Nigerian equities market started the month on a positive note with both the All-Share Index and the NSE-30 Index closing in the green. Performance across the sectors was broadly positive except for the Insurance sector, which recorded a loss of 2.35 percent. The Industrial (+0.78 percent), Banking (+0.70 percent), Consumer Goods (+0.13 percent), and Oil & Gas sector (+0.22 percent) sectors recorded gains. The markets may remain volatile in the near term. We advise investments in quality stocks with a long term investment horizon.
- The Nigerian equity market closed on a positive note today as All Share Index increased by 0.29 percent to close at 24,766.12 points.
- The market cap of equities listed on the NSE increased to ₦12.919 trillion from ₦12.882 trillion
- Market breadth remained positive with 19 gainers as against 16 losers.
The NSE 30 Index increased by 0.39 percent
Flour Mills of Nigeria and BUA Cement Plc were the key gainers, while Custodian Investment Plc and Dangote Sugar were the key losers.
- The Overnight (O/N) rate increased by 12.23 percent to close at 14.33 percent
- The Open Buy Back (OBB) rate also increased by 11.93 percent to close at 13.33 percent
Due to the lack of inflows in the system, the money market rates are expected to remain in the double-digits.
The foreign reserves of the CBN experienced a fall as FX outflows continue to surpass inflows, declining by $59.86 million WTD to $35.92 billion. I&E FX window observed lower volume passing through the market due to tightened system liquidity. Naira strengthened by 0.32 percent as the dollar was quoted at ₦388.00 as compared to ₦389.25 previously. Most participants maintained bids between ₦380.00 and ₦392.50 per dollar.
- In the NT-bills market, average yield across the curve remained unchanged at 1.75 percent.
The CBN held its scheduled Primary Market Auction on July 29, selling NT-Bills worth ₦265.96 billion across the 91-day (₦49.84 billion), 182-day (₦54.59 billion), and 364-day (₦161.52 billion) tenors. The stop rates for the 91-day, 182-day, and 364-day tenors cleared at 1.200 percent (-10 bps), 1.500 percent (-30 bps), and 3.400 percent (+5 bps), respectively. The auction was oversubscribed by 76 percent with bid-to-cover ratios settling at 1.89x (91-day), 2.91x (182-day), and 1.33x (364-day). The auction witnessed an increased subscription, especially in 182-day bills, due to excess liquidity in the market.
- The OMO bills market closed on a positive note with average yield across the curve declining by 18 bps to close at 4.05 percent
The FGN bond market closed on a positive note today, as the average bond yield across the curve cleared lower by 20 bps to close at 3.89 percent
The FGN bond market witnessed the trade with bullish sentiment at the closing of the last month due to the adequate liquidity and local participation. At the beginning of August, we expect moderate trading volume in anticipation of strained system liquidity.
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