Profit Taking Drags Market into the Red

Sustained profit taking by investors dragged the domestic bourse into the red for the third consecutive trading session as the All Share Index shed 51bps to settle at 41,243.24 points on Tuesday while YTD return moderated to 7.8%. Losses in INTBREW (-5.0%), SEPLAT (-5.0%) and ZENITH (-2.1%) were the major drags to performance today. As a result, market capitalisation reduced to N15.0tn as investors lost N76.3bn in value. Similarly, activity level waned as volume and value traded fell 7.1% and 19.3% to 352.9m units and N4.1bn respectively. JAPAUL OIL (80.3m), ZENITH (59.9m) and FBNH (24.3m) were the top traded stocks by volume while ZENITH (N1.8bn), FBNH (N301.2m) and GUARANTY (N210.7m) were the top traded stocks by value.

Industrial Goods Index Emerges Lone Gainer
Sector performance remained largely negative as 4 of 5 indices declined. The Oil & Gas index depreciated the most, losing 2.7% on the back of losses in SEPLAT (-5.0%) while the Banking index was dragged 1.0% southward due to price depreciation in ZENITH (-2.1%) and ETI (-5.0%). Similarly, the Insurance and Consumer Goods indices slid 0.6% and 0.4% due to sell offs in NEM (-2.5%), LASACO (-2.8%), INTBREW (-5.0%) and NIGERIAN BREWERIES (-0.7%). On the other hand, the Industrial Goods Index was the lone gainer, up 0.9% following gains recorded in WAPCO (+1.5%) and CCNN (+4.8%).

Investor Sentiment Weakens
Investor sentiment waned today as market breath (advance/decline ratio) weakened to 0.7x from 2.0x recorded on Monday as 21 stocks advanced relative to 31 stocks that declined. The gainers’ chart was topped by GLAXOSMITH (+10.2%), WEMA (+9.0%) and MRS OIL (+5.0%) while DIAMOND (-7.3%), ETI (-5.0%) and INTBREW (-5.0%) led the losers’ chart. Following another negative close today and weaker investor sentiment, we believe market performance in the near term would rebound. Our view is further buttressed by the fact that the Relative Strength Index (RSI), a technical indicator which measures market momentum, is currently at 33.8 which is close to the oversold region.