Equities Pare Gains as Investors Book Profit

The Nigerian bourse closed the first trading day of the week negative to buck a 2-day positive run, as the All Share Index (ASI) slipped 0.4% to settle at 23,826.76pts. The negative close in the benchmark index was a result of weaker sentiment for bellwether stocks in the manufacturing and oil & gas sectors – DANGOTE CEMENT (-1.4%), FORTE OIL (-5.0%) and UNILEVER (-5.0%). Market capitalization equally declined N30.7bn to close at N8.2tn. Similarly, activity level measured by volume and value of shares traded fell 3.8% to 232.2m units and 25.4% to N1.5bn respectively.

A Broadly Bearish Performance
It was a largely bearish performance across sector indices today on the Nigerian bourse as all sector indices save financial services – Banking and Insurance indices – closed weaker. Sentiment for banking stocks remains robust as the Banking index gained 2.1% on bargain hunting in ZENITH (+8.6%), while a marginal 5bps gain was recorded in the Insurance index on account of the appreciation in CONTINSURE (+1.1%). On the other hand, the Oil & Gas index recorded the highest decline of 2.4% due to the selloffs in FORTE OIL (-5.0%) and TOTAL (-5.0%). The Consumer and Industrial Goods indices trailed with a 0.7% apiece, pressured by losses in UNILEVER (-5.0%) and DANGOTE CEMENT (-1.4%) accordingly.

Negative Market Sentiment
Market breadth measured by ratio of advancers to decliners turned negative as it closed at 0.8x (from 2.0x the previous trading session) after 19 stocks advanced against 25 declining stocks. Top gaining stocks were ZENITH (+8.6%), HONYFLOUR (+5.5%) and CCNN (+5.0%) while CONOIL (-9.7%), 7UP (-5.0%) and TOTAL (-5.0%) were the highest declining stocks. Our overall short term outlook remains bearish on macroeconomic concerns and forex inflexibility; hence, we reiterate our long term investment case on Nigerian equities. However, investors with short holding period and less risk aversion could take advantage of irregular price cycles as we anticipate high volatility in the market anchored by fluctuations in monetary policy expectations and crude oil prices.