Bullish Trend Continues at the Exchange

The benchmark indicator of Nigerian equities -- the All Share Index (ASI) - gained 73bps today to close at 27,833.89 points extending the positive run into the 3rd trading session though YTD return is still at a loss of 19.7%. The bullish close of the ASI was however broadly driven by a late rally in DANGOTE CEMENT (+6.3%) - a blue-chip counter accounting for 30.5% weighting of the benchmark index -  as sell pressures were still evident across a broad range of banking and consumer goods counters. Market activities also improved as volume and value traded rose 13.8% and 44.5% to 127.8m units and N2.4bn respectively.

Industrial Goods Index Tops Sector Gainers
Sector indices performance was mixed as 3 sectors shed points while 2 traded positive. The Industrial Goods index led the gainers as it strengthened 3.1% against the backdrop of the rally in DANGOTE CEMENT (+6.3%) while the Oil & Gas index also advanced 17bps on the back of bargain hunting in OANDO (+1.5%). Sentiments remained bearish for Consumer Goods counters with the Index weakening 1.6% on the back of sell pressures in bellwethers -- NIGERIAN BREWERIES (-2.9%) and NESTLE (-1.8%). The Banking index trailed as investors took profit in banking stocks which rallied last week; ZENITH (-4.7%) and GUARANTY (-2.0%) drove the weak performance of the index. The insurance index also shed 0.4%.

Market Breadth Weakens on Sell Pressure
Market breadth weakened further to 0.6x from 1.0x the previous trading session. LAWUNION (+7.3%), DANGOTE CEMENT (+6.3%) and LEARNAFRCA (+4.3%) led 16 gainers whilst HONYFLOUR (-9.4%), UACN (-5.0%) and SKYEBANK (-5.0%) topped 28 losers. Despite the bullish close of the ASI today, the weakened market breadth suggests that sentiment for equities is still broadly negative. Our short term outlook for the market remains bearish on weaker earnings and policy uncertainties, although we anticipate some level of bargain hunting in the last two weeks of December as portfolio managers close their positions for the year. Nevertheless, valuations are still right for investors with a long holding period while technical short term traders will continue to see avalanche of opportunities to record some short term capital gains.