Mar­ginal uptick seen amid bear­ish sen­ti­ment as in­vestors cherry pick stocks

Business a.m. - - FINANCE & INVESTMENT - Sto­ries: Ades­ola Afo­labi

IN­VEST­MENT AN­A­LYSTS ARE ex­pect­ing a mild uptick in mar­ket per­for­mance this week as in­vestors cherry pick fun­da­men­tally sound stocks.

Specif­i­cally, an­a­lysts at Afrin­vest say though the bear­ish trend in the mar­ket is yet to be over, bar­gain hunt­ing in some strong stocks will marginally lift the mar­ket.

“In the com­ing week, we ex­pect a mild uptick in mar­ket per­for­mance as in­vestors seek bar­gain hunt­ing op­por­tu­ni­ties in fun­da­men­tally sound stocks while main­tain­ing our bear­ish near-term,” they said.

The mar­ket has traded low in re­cent months, fall­ing 2.4 per­cent last week on the back­drop of profit-tak­ing ac­tiv­i­ties in mar­ket bell­wethers.

In­deed the lo­cal bourse closed lower last week from the pre­vi­ous week pos­i­tive per­for­mance as profit-tak­ing in mar­ket bell­wethers dragged the eq­ui­ties mar­ket on 3 of 5 trad­ing days.

Con­se­quently, the All Share In­dex (ASI) dropped 2.4 per­cent week-on-week to set­tle at 32,124.94 points while year-to-date loss set­tled at -16.0 per­cent and mar­ket cap- ital­i­sa­tion shed N285.6 bil­lion to N11.7 tril­lion.

A re­view of ac­tiv­i­ties in the week ended 2nd Novem­ber 2018 showed it started on a pos­i­tive note as gains in DANGCEM and GUAR­ANTY lifted the bench­mark by 88 ba­sis points on Mon­day. How­ever by Tues­day, sell pres­sures on FBNH, ZENITH and SEPLAT re­duced gains from Mon­day as ASI shed 8 ba­sis points.

The nega­tive trend con­tin­ued as el­e­vated sell pres­sures on Wed­nes­day and Thurs­day re­sulted to losses in DANGCEM, STAN­BIC, NIGE­RIAN BREW­ERIES, NES­TLE and DANGSUGAR which fur­ther dragged the lo­cal bourse by 212 ba­sis points and 142 ba­sis points re­spec­tively.

Al­though buy in­ter­ests in DANGCEM, AC­CESS and ZENITH buoyed the ASI by 37 ba­sis points on Fri­day, the in­dex closed in the red at the end of week, down 2.4 per­cent.

Per­for­mance across sec­tors was also bear­ish as all 5 in­dices re­ceded week-on­week. The in­dus­trial in­dex shed the most, down 4.1 per­cent w-o-w on the back of price de­pre­ci­a­tion in mar­ket bell­wethers DANGCEM (-2.9%) and WAPCO (-4.1%) . Sim­i­larly, the con­sumer goods and oil & gas in­dices shed 3.2 per­cent and 2.6 per­cent w-o-w re­spec­tively due to profit tak­ing in NIGE­RIAN BREW­ERIES (-6.5%), NES­TLE (-1.4%) and SEPLAT (-3.1%).

The in­sur­ance and bank­ing in­dices de­clined the least, down 2.4 per­cent and 0.4 per­cent w-o-w re­spec­tively due to sell-offs in CUS­TO­DIAN (-7.4%), ZENITH (-1.9%), UBA (-1.2%) and FBNH (-15.0%).

In­vestor sen­ti­ment as mea­sured by mar­ket breadth de­clined (ad­vancers/de­clin­ers) soft­ened to 0.3x from 0.7x in the pre­vi­ous week as 17 stocks ad­vanced while 49 stocks de­clined.

The best-per­form­ing stocks for the week were PRESCO (+12.9%), NEIMETH (+11.1%) and AIRSERVICE (+10.0%) while UNITYBNK (-21.1%), DANGFLOU (-21.1%) and CCNN (-18.8%) were the worst per­form­ing stocks.

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