Home Companies&Markets WEEKLY MARKET WRAP: All-Share Index shed 3.0% w/w to close at 40,439.85...

WEEKLY MARKET WRAP: All-Share Index shed 3.0% w/w to close at 40,439.85 points, the biggest weekly fall in eight years

NSE Trading Floor

FRI 12 FEB, 2021-theGBJournal- Bearish sentiments persisted in local bourse for the second consecutive week, as investors became increasingly worried about the uptick in yields in the FX market.

The result of the NTB auction wherein average stop rates rose by 105bps to 2.33% (from 1.28% at the last auction) lends credence to investors’ downbeat mood during the week.

Accordingly, the All-Share Index shed 3.0% w/w to close at 40,439.85 points – the biggest weekly fall in eight years. Consequently, the YTD return moderated sharply to 0.4%.

Activity levels were slightly weak, as trading volumes declined by 2.8% w/w while value fell by 20.3% w/w. Notably, sell offs in bellwether stocks; GUARANTY (-15.7%), BUACEMENT (-7.2%), DANGCEM (-4.4%) and ZENITH (-3.9%) drove the weekly loss.

Sectoral performance was broadly negative as all sectors closed in the red. The Banking (-8.8%) index led the losers chart followed by Insurance (-6.5%), Industrial Goods (-5.7%), Oil and Gas (-1.0%) and Consumer Goods (-0.9%) indices.      

With the latest outcome of the NTB auction pointing towards yield elevation in the near term, we expect investors to trade cautiously while taking positions in stocks with attractive dividend yields. As a result, we expect the local bourse to exhibit a zig-zag pattern in the near term as the opposing forces of uptick in yields and FY 2020 corporate earnings releases dictate market performance.

Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings.

Meanwhile, Global stocks edged higher for the second consecutive week as continued progress in vaccine distribution and prospects of additional fiscal stimulus from Biden administration strengthened optimism about sustained recovery in economies activities. U.S (DJIA: +0.9%; S&P: +0.6%) stocks posted gains on the back of announcement of deals for an additional 100 million vaccine doses amidst positive corporate earnings announcements. 

In Europe, the STOXX Europe (+0.4%) and FTSE 100 (+0.6%) were on track for their second consecutive weekly gains, as vaccine-induced optimism was complemented by positive corporate results.

In Asia, the Nikkei 225: (+2.6%) and SSE: (+4.5%) were on course for another week of gains, reflecting optimism that Biden’s coronavirus relief package will get congressional approval. Emerging markets (MSCI EM: +0.0%) stocks were broadly flat despite robust gains in India (+1.9%) and China (+4.5%) while Frontier (MSCI FM: -1.0%) market stocks halted their five-week gaining streak, following losses in Nigeria (-3.0%) which masked gains in Kenya (+3.4%).-With Cordros Research

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