26 June 2017

Nigeria: Equities - Mix of Profit Taking, Bargain Hunting to Continue This Week

THE equities market is likely to record a mixture of profit taking and bargain hunting by investors this week, amidst sustained investors' confidence.

Also, some analysts are of the opinion that negative market sentiment may continue this week as the four-week bullish run in the Nigerian Stock Exchange, NSE, came to a halt last week against the backdrop of a slide in oil prices which weakened sentiment and prompted investors to take profit in counters that had appreciated in prior weeks.

Specifically, the renewed bearish activity which prevailed last week that led to the drop in the twin market performance, All share Index and market capitalisation by 499 bases points, bps each to 32,122.14 points and N11.11 trillion respectively.

Bearish performance

The bearish performance was mainly due to losses in the high cap stocks across the Consumer Goods, Banking and Industrial Goods sectors.

Specifically, Nigerian Breweries declined by 7.4 per cent, followed by Access Bank 11.4 per cent. Guaranty Trust Bank 3.4 per cent and Dangote Cement 4. 6 per cent.

Sectoral Performance: The Financial Services Industry (measured by volume) led the activity chart with 1.783 billion shares valued at N15.865 billion traded in 15,948 deals; thus contributing 77.17 per cent and 64.55 per cent to the total equity turnover volume and value respectively.

The Conglomerates Industry followed with 239.226 million shares worth N571.910 million in 1,251 deals. The third place was occupied by Consumer Goods Industry with a turnover of 85.663 million shares worth N4.522 billion in 3,673 deals. Trading in the Top Three Equities namely - Zenith International Bank Plc, Transnational Corporation of Nigeria Plc and FBN Holdings Plc (measured by volume) accounted for 665.483 million shares worth N6.695 billion in 5,649 deals, contributing 28.80 per cent and 27.24 per cent to the total equity turnover volume and value respectively.

Analysts' expectations: Analysts from Vetiva Capital Management stated: "Given the sustained negative market sentiment at week close, indicated by the widely negative market breadth through the week, we expect bearish trading to extend into this week. On the stock to watch, they added "whereas the rally in larger Pharmaceutical names looks to have cooled, NEIMETH Pharmaceuticals has recorded a 51 per cent rise over the past six sessions and remains stock to watch. The stock currently trades at a 2017-high of ¦ 0.98, returning26 per cent Year to Date, ytd."

Analysts from Afrinvest Securities Limited stated: "We thus expect the fundamental driver to continue to dictate performance in the near term, although we remain medium term positive on the market performance."

Also, analysts from Cowry Asset Management stated: "This week, we expect a mix of profit taking and bargain hunting activities amid sustained investor confidence."

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