Marginal uptick seen amid bearish sentiment as investors cherry pick stocks
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.