Bargain Hunting in Banking Stocks Drives Index Higher

Equities rebounded on Tuesday in the Nigerian bourse as the market shrugged off the bearish start to the week, with the All Share Index gaining 12bps to close at 27,252.48 points; thus paring YTD loss to 4.9%. Performance in the market was mainly driven by bargain hunting in Tier-1 banks - GUARANTY (+1.3%) and ZENITH (+0.8%) - in addition to strong buy sentiment in OKOMUOIL (+9.2%) following its impressive 9M:2016 result released yesterday. Investors in turn gained N11.1bn as market capitalization increased to N9.4tn. However, activity level declined as volume and value traded slid 15.0% and 30.1% to settle at 186.9m units and N1.3bn respectively.
Oil & Gas Index Emerges Lone Loser
Performance across sectors was broadly positive as 3 sector indices appreciated, 1 declined and the other closed flat. The Banking index appreciated the most (+0.4%) at the end of today’s trading session on account of gains in GUARANTY (+1.3%) and ZENITH (+0.8%) while the Insurance index added 0.1% on account of buy sentiment in CONTINSURE (+0.9%). Similarly, price appreciation in GUINNESS (+2.6%) and PZ (+1.4%) drove the Consumer Goods index 3bps higher. On the Contrary, the Oil & Gas index emerged lone loser, dipping 0.5% as investors sold down on OANDO (-4.9%) following the release of its 9M:2016 result which showed a loss after tax of N35.9bn. The Industrial Goods index closed flat.

Market Breadth in the Positive Region
At the close of trade today, investor sentiment improved as market breadth stood at 1.1x (from 0.6x yesterday) after 17 stocks advanced against 16 declining stocks. ETERNA (+10.0%), OKOMUOIL (+9.2%) and REDSTAREX (+5.2%) topped the gainers list while UAC-PROP (-4.9%) UBN (-4.9%) and OANDO (-4.9%) topped the losers' chart. Today’s performance can be attributed to bargain hunting on some stocks that had declined in prior trading sessions and investors’ reaction to recently released Q3:2016 results . We expect that the Q3: 2016 earnings releases will continue to impact market performance in the short-term and expect market to subsequently trade sideways.