Benchmark Equity Index Down to 4-Month Low

The bearish run in the Nigerian equities market was sustained on Tuesday as the All Share Index trended southwards for the third consecutive session. The ASI dipped 1.7% to close at 27,098.52 points, extending YTD loss to 5.4%. Today’s negative performance was broadly driven by weaker sentiment for bellwether – DANGCEM (-4.8%), as investors speculated over its 9M: 2016 result due for release on Thursday 27th. Accordingly, market capitalisation declined N163.6bn to settle at N9.3tn. On the other hand, activity level improved as volume and value traded rose 11.1% and 16.2% to settle at 112.4m units and N1.2bn respectively.

Oil & Gas sector Emerges Lone Gainer
Sector performance was broadly negative as four sector indices closed lower while only one advanced. The Industrial Goods index led the pack of decliners, falling 2.1% on the back of sell pressure on cement companies - ASHAKACEM (-9.7%) and DANGCEM (-4.8%). The Banking index trailed as it declined 71bps on account of losses in ZENITH (-0.7%) and GUARANTY (-0.4%). In the same vein, the Consumer Goods index trimmed 0.2% against the backdrop of price depreciation in FLOURMILL (-3.3%) and INTBREW (-2.8%) while the Insurance index (-0.1%) closed lower as investors’ took profit in WAPIC (-1.9%). On the flipside, the Oil & Gas index gained 53bps on renewed buying interest in MOBIL (+2.4%) and SEPLAT (+0.9%).

Investor Sentiment Remains Weak
Investor sentiment remained frail today as market breadth further retreated to 0.4x (from 0.6x yesterday) after 11 stocks advanced against 27 declining stocks. The best performing stocks today were PRESCO (+5.1%), WEMA (+4.9%) and UNITY (+4.8%) while ASHAKACEM (-9.7%), AGLEVENT (-4.9%) and VITAFOAM (-4.9%) declined the most. Although the significant decline in the benchmark index today is mainly attributable to sell pressure on DANGCEM, the weak level of market breadth indicates broad-base tepid sentiment for equities and also validates our earlier opinion on underperformance of equities in the short-term on the back of macro pressures. Nonetheless, the significant decline today offers bargain hunting opportunities, thus we expect a slight retracement in subsequent sessions.