Impressive corporate earnings by bellwether stocks supported market performance this week, as investors increased their bets on blue-chip companies in anticipation of continued expansion in profits.
Notably, investors’ buying interest in NB (+18.6%), SEPLAT (+16.5%), WAPCO (+16.1%), GUINNESS (+13.1%), and UNILEVER (+11.5%) supported market performance.
Pertinently, the All-Share Index rose by 2.4% w/w to close at 49,638.94 points. Consequently, the MTD and YTD return increased to +5.7% and +16.2%, respectively. Similarly, activity levels were stronger than the prior week, as trading volumes and value increased by 62.8% w/w and 32.4% w/w, respectively. Across our sectoral coverage, the Oil and Gas (+10.2%), Consumer Goods (+6.3%), Insurance (+3.4%) and Industrial Goods (+0.5%) indices closed in the green, while the Banking (-1.5%) index was the sole loser.
Anaylysts at Cordros Capital say in the week ahead, investors are expected to continue to rotate their portfolios towards cyclical stocks that delivered decent earnings this week. And as such there are indications that the bulls will maintain dominance, however, the magnitude of the gains will be substantially lower, as profit takers are likely to cash out on the gains across bellwether stocks. Notwithstanding, we reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings.
