Nigerian equities watch: Bears hold sway in first week of March

The Nigerian equities market saw a challenging week as bears dominated trading activities, with the NSE All-Share Index posting gains in just one session. Muktar Mohammed, an analyst at Assar Investment, shed light on the factors driving sentiment in the market. Investors have been cautious and jittery as they wait for corporate results to determine their next moves. The market has been influenced by factors such as market perception, pricing dynamics, and sector-specific developments. Financial stocks have been the focal point for investors, with many eyeing entry points ahead of dividend announcements from key players like GTB, Access Bank, and Fidelity Bank. The energy sector has also seen significant activity, with investors attracted by potential high returns. The oil and gas sector witnessed a rally driven by rising oil prices, hovering around $65 per barrel. However, the sector faces challenges as companies grapple with the aftermath of last year's lockdowns and low oil prices. While some firms like Seplat announced dividends, the overall financial performance has been lackluster. The sector remains sensitive to global oil trends and regulatory decisions, making it a volatile investment area. In terms of earnings reports, the banking sector saw mixed reactions from investors. Zenith Bank's positive results initially sparked a rally, but the momentum waned as profit-taking ensued. Investors who had already factored in the positive outcomes of the financial reports exited their positions, resulting in price corrections. Companies like First Bank, with less favorable results, saw their stock prices decline. The consumer goods space also faced challenges, with companies reliant on consumer spending feeling the pinch. The conversation also delved into the impact of COVID-19 vaccinations on economic recovery. The gradual rollout of vaccines in Nigeria is seen as a positive development, potentially revitalizing various sectors. Improved productivity, consumer confidence, and reopening of businesses could boost economic growth. However, challenges such as vaccine hesitancy and distribution logistics need to be addressed for the full benefits to materialize. Looking ahead, economic data releases in March, including inflation figures and the NPC meeting, will be closely monitored. Expectations are that inflation may spike in the short term due to supply chain disruptions, but a gradual improvement is anticipated in the third quarter. The impact of inflation on the consumer sector is a concern, as companies dependent on consumer spending may face challenges. Overall, the equities market in Nigeria continues to navigate turbulent waters, with investors cautious yet hopeful for a turnaround.