Daily Market Wrap

By FSDH Research

Tuesday, August 4, 2020

Market Insight: The Nigerian equities market continued to trade higher as both the All-Share Index and the NSE-30 Index closed in the green.  Performance across the sectors was broadly positive except for the Industrial sector, which recorded a loss of 0.03 percent. The Insurance (+2.70 percent), Banking (+1.58 percent), Oil & Gas (+0.23 percent), and Consumer Goods sector (+0.07 percent) sectors recorded gains. The markets may remain volatile in the near term. We advise investors to accumulate quality stocks with a long term investment horizon.

Market Brief

  • The Nigerian equity market closed on a positive note today as All Share Index increased by 0.31 percent to close at 24,841.94 points.
  • The market cap of equities listed on the NSE increased to ₦12.959 trillion from ₦12.919 trillion
  • Market breadth was positive with 23 gainers as against 10 losers.

NSE 30

  • The NSE 30 Index increased by 0.33 percent
  • Flour Mills of Nigeria and Zenith Bank were the key gainers, while Total Nigeria and Unilever Nigeria were the key losers.

Money Markets

  • The Overnight (O/N) rate declined by 4.25 percent to close at 10.08 percent
  • The Open Buy Back (OBB) rate also declined by 4.33 percent to close at 9.00 percent

We expect money market rates to remain at current levels in the absence of any significant inflows during the week.

In the I&E FX window, the dollar supply remained weak, with a very low volume passing through the market due to the tightened system liquidity. Naira weakened by 0.26 percent as the dollar was quoted at ₦389.00 as compared to ₦388.00 on the previous day. Most participants maintained bids between ₦380.00 and ₦390.00 per dollar.

Treasury Markets

  • In the NT-bills market, average yield across the curve declined by 4 bps to close at 1.71 percent from 1.75 percent on the previous day.

For this week, we expect an increased demand for the NT-Bills due to the unmet bids from the last week’s Primary Market Auction. However, the demand could be slightly impacted due to the strained liquidity in the system.

  • The OMO bills market closed on a positive note with average yield across the curve declining by 32 bps to close at 3.74 percent

Bond Markets

  • The FGN bond market closed on a negative note today, as the average bond yield across the curve cleared higher by 7 bps to close at 3.96 percent

For this  week, we expect sustained, albeit reduced buying interest due to lower system liquidity.

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