Equities Market Review and Outlook

Performance in the first trading week of the New Year was majorly dragged by profit taking in market bellwethers as the broader index closed negative on 3 of the 4 trading sessions. The only positive performance was recorded on Friday (+0.2) as gains in Tier-1 counters in the Banking space - ZENITH (+1.8%), ACCESS (+2.3%), UBA (+1.5%), ETI (+1.2%) FBNH (+1.7%) and GUARANTY (+0.3%) - lifted the market. Consequently, the All Share Index (ASI) declined 2.3% W-o-W to close at 26,251.39 points while market capitalization depreciated by N214.4bn to settle at N9.0tn. Activity level was mixed as average volume traded improved 9.5% W-o-W to 129.1m units while average value traded slid 9.7% to N1.1bn.

Sentiment across sectors was bearish as all indices closed in the negative territory. The Industrial Goods index declined the most, down 3.0% W-o-W, and largely attributed to weak sentiment toward DANGCEM (-4.0%) and WAPCO (-2.3%). The Consumer Goods index shed 2.3% on account of losses in DANGFLOUR (-4.9%), NIGERIAN BREWERIES (-4.0%) and GUINNESS (-3.7%). The Banking and Oil & Gas indices lost 1.6% apiece W-o-W due to profit taking in GUARANTY (-4.7%), ETI (-4.2%), MOBIL (-5.0%) and FORTE (-4.6%) while the Insurance index recorded a 0.2% decline on the back of sell-offs in NEM (-9.5%) and CUSTODYINS (-4.9%).

Investor sentiment during the week was soft as indicated by the market breadth (advancers/decliners ratio) which settled at 0.6x as 17 stocks advanced against 29 that declined. The top gainers for the week were UAC-PROP (+14.5%), ACCESS (+6.9%) and ETERNA (+6.5%) while NAHCO (-13.9%), CCNN (-13.4%) and NEM (-9.5%) led laggards. Following the poor performance recorded this week, we believe losses could moderate in the coming week as investors take advantage of bargain opportunities in value stocks.