Profit-taking in Large-Caps Dampens Market Performance

The Nigerian bourse opened the week in the red as the All Share Index shed 0.3% to close at 27,368.41 points amidst selloffs across board. Market capitalization also contracted N28.3bn to settle at N9.4tn. The benchmark index was majorly dragged by profit-taking in NIGERIAN BREWERIES (-1.3%) and GUARANTY (-1.3%). Market activity also weakened significantly as volume and value traded dipped 70.0% and 80.8% to close at 83.8m units and N711.1bn respectively.
Financials Lead Sector Decliners
Sector performance mirrored overall market movement as all sector indices save for the Industrial Goods index (which closed flat) depreciated at the end of today’s trading session. The Banking and Insurance Indices declined 0.5% apiece on the back of sell pressure in GUARANTY (-1.3%), DIAMOND (-4.5%), UNITY (-9.5%), CONTINSURE (-3.1%) and NEM (-4.4%). Similarly, the Consumer Goods index shed 0.4% as a result of profit-taking in NIGERIAN BREWERIES (-1.3%) whilst the 0.4% downtrend in OANDO share prices dragged the Oil & Gas index 4bps lower.
Investor Sentiment Weakens
As activity level softened - with total number of deals transacted during trading session dropping from 3,255 on Friday to 2,279 today - sentiment was also weak. Consequently, market breadth (advancers/decliners ratio) closed at 0.6x (from 1.0x on Friday) owing to 10 advancing stocks against 17 declining stocks. NPF MICROFINANCE (+4.2%), 7UP (+3.5%) and CHAMPION (+3.4%) led the gainers while UNITY (-9.5%), NAHCO (-5.0%) and DIAMOND (-4.5%) led the laggards. Sentiment for equities is partly being dragged by the attractive yield environment in the money market segment of the debt market. This is highlighted by the significant decline in volume & value traded and total number of deals transacted today as the capital market prepares for Wednesday’s T-bills auction. Also, sentiment in equities may remain dampened in the interim amidst expectations of weaker macroeconomic indicators with the NBS set to release some reports this week. Accordingly, we expect the market to trade sideways till midweek but we may see some bargain hunting towards the end of the week.