Bearish Trend Continues at the Nation’s Bourse

Photo L-R: Mr. Gboyega Balogun, Chief Executive Officer, CSL Stockbrokers; Mr. Wole Abegunde, Chief Executive Officer, Meristem Securities; Mr Aledare Amos, Chief Executive Officer, GTI Securities Limited; Mr Ade Bajomo, Executive Director, Market Operations and Technology Division, The Nigerian Stock Exchange (NSE); Mr Ade Ewuosho, Head, Market Services, NSE; and Mr Oluwole Awe, Chief Executive Officer, Investment One; at the launch of Trade Smart press conference held today at the Nigerian Stock Exchange.

The bears' hold on the Nigerian bourse was tightened today as the All Share Index trended further southwards, losing 0.5% to settle at 28, 219.44 points, an 11-week low. The poor performance of the market today was broadly driven by the persistent sell-offs in NIGERIAN BREWERIES (-1.5%) as well as losses in FORTE OIL (-5.0%) and STANBIC (-4.9%).

Capitalization in the market also depreciated N45.3bn to berth at N9.7tn. Market activity level was also mixed today as volume traded appreciated 10.5% to 143.7m units while value traded fell 42.1% to N1.5bn.

Mixed Performance across Sectors
Performance across the sectors was mixed today after all sectors declined yesterday. The Banking and Insurance indices led sector gainers, rebounding 0.3% and 0.2% respectively against the backdrop of price appreciation in ZENITH (+1.5%) and NEM (+3.3%).

The Industrial Goods index also closed marginally up 2bps. In contrast, the Oil & Gas index lost 2.5% due to losses sustained in FORTE OIL (-5.0%) and OANDO (-1.8%). Similarly, the continuous sell offs in NIGERIAN BREWERIES (-1.5%) drove the Consumer Goods Index further southwards (-0.7%).

Sentiments Remain Unchanged
The persistent bearish sentiment of investors towards the Nigerian bourse was observed as 15 stocks advanced while 25 stocks declined leading to a market breadth of 0.6x. The best performing stocks at the close of trade were BERGER (+4.9%), CAVERTON (+4.6%) and DIAMOND BANK (+3.6%), while DANGFLOUR (-5.5%), TRANSCORP (-5.3%) and FORTE OIL (-5.0%) declined the most. Investors' -- both foreign and domestic - confidence has been significantly dampened over the past two months due to the plethora of negative news flows on earnings and corporate governance.

With the ASI already significantly below its support line at an RSI of 17.8 -- indicating stocks are oversold -- we expect to see some bargain hunters taking position in subsequent trades; however, we maintain that investors with a short term horizon trade cautiously.