Weekly Market Wrap - 19 January 2018
NSE ASI closes the week with 54bps gain
Despite closing 54bps higher today, market sentiment was mixed – evidenced by see-saw intraday trading and negative market breadth. Overall, the NSE ASI surged 511bps w/w. We note the mostly-sideways trading pattern on the exchange at week close, indicated by mixed closes across key sectors and negative market breadth. Absent any significant news flow at week open, we expect the market to kick off the week with varied trading as investors take profit and seek bargain names.
Stock Watch: In line with the wider market, CCNN has been on an uptrend, rising 32% this week. The stock currently trades at ₦17.50, above Vetiva’s target price of ₦8.39 and has returned 84% ytd.
Liquidity constraints keep yield under pressure
With system liquidity under pressure at week open, the T-bills market opened on a weak note. Sentiment remained mixed going into mid-week, despite a positive lead from better-than-expected December inflation figures (15.4% vs consensus of 15.8%) on Tuesday. Trading in the bond market was similarly mixed at week open as investors cautiously awaited the release of the Q1’18 bond calendar. With the CBN showing no signs of letting up on its aggressive mop up stance, we expect mixed trading to persist in the T-bills at week open. Barring any shift in the MPC’s stance on Monetary policy levers, we expect yields in the bond space to remain around current levels, especially as the market anticipates yields at Wednesday’s bond auction (₦110 billion on offer) to remain around these levels.
The CBN continued to intervene in the Foreign Exchange Market at week open, injecting $210m across various segments of the market. Amidst this, the naira appreciated ₦0.10 and ₦0.31 at the CBN and I&E FX windows respectively, to settle at ₦305.70 and ₦360.10 against the dollar. The naira however weakened by ₦1.00 in the parallel market to close at ₦362.50 against the greenback. We expect further CBN interventions in the coming week to sustain liquidity in the foreign exchange market.
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