Market Opens Bearish on Profit Taking in Large-Caps

The stock market opened the week on a bearish note as the NSE All Share Index eased 0.2% to close on Monday at 28,740.24 points. Also, market capitalization moderated to N9.8tn as investors lost a total of N24.6bn. Today’s performance was dragged by sell pressure in WAPCO (-5.1%), ETI (-1.8%), GUARANTY (-1.0%) and NIGERIAN BREWERIES (-0.7%). Activity in the market waned as volume and value traded declined 15.8% and 1.6% to close at 315.5m units and N1.7bn respectively.
OANDO PLC Announces Earnings Warning for H1:2016
All sector indices closed in the red except the Oil & Gas index which appreciated 2.1% on the back of 8.1% appreciation in FORTE which offset sell-offs in OANDO (-4.1%). OANDO announced that the impact of the FX adjustment by CBN is expected to amount to an unrealized foreign exchange loss arising from foreign currency denominated liabilities. The Industrial Goods and Insurance indices were the worst performers, down 2.1% apiece on the back of profit taking in WAPCO (-5.1%) and MANSARD (-1.9%) while the Consumer Goods index followed, shedding 0.4% on account of NIGERIAN BREWERIES (-0.7%) and TIGERBRAND (-3.5%). Likewise, the Banking index declined 0.3% on downward movement in GUARANTY (-1.0%) and ETI (-1.8%).
Investor sentiment weakened as market breadth declined to 0.3x (lower than 0.5x on Friday) owing to 10 advancing stocks and 31 declining stocks. SKYEBANK (+10.0%), FORTE (+8.1%), and NPFMCRFB (+4.3%) led advancers whilst LAWUNION (-8.3%), WAPCO (-5.1%) and ARBICO (-5.0%) led laggards. We are of the view that today’s decline was as a result of profit taking in the large-cap stocks. We expect trading sentiment in subsequent sessions to be driven by H2:2016 corporate earnings.