Stock Market Rebounds after 4-Day Losing Streak

The bearish sentiment in the market was halted at the close of trade on Wednesday as bargain hunters positioned in blue-chips across Banking and Consumer Goods sectors to lift the benchmark index which had been on a 4-day losing streak. The NSE ASI gained a marginal 3bps to close at 25,241.63 points and could have performed better (up 1.2%) but for weaker sentiment toward DANGCEM (-2.5%) which dragged the index. Accordingly, market capitalisation advanced N2.8bn to settle at N8.7tn. Today’s positive performance was largely as a result of bargain hunting in GUARANTY (+3.9%), NIGERIAN BREWERIES (+1.4%), MOBIL (+10.2%) and ZENITH (+2.1%). Market activity was however mixed as volume traded fell 19.0% to settle at 414.1m units while value traded surged 101.6% to settle at N3.4bn respectively.

Oil & Gas Index Tops Gainers Chart
Similar to the previous trading session, performance across sector was mixed. The Oil & Gas index (+2.4%) topped the gainers chart, driven by buy sentiment in MOBIL (+10.2%) and OANDO (+5.0%). The rally in MOBIL is being driven by recently released regulatory filing of the divestment of ExxonMobil Oil Corporation shares in the company to NIPCO Investment Limited. The filing indicated that the stock was valued at a significant premium to market price. The Banking index trailed, appreciating 2.3% as investors hunted for bargains in GUARANTY (+3.9%) and ZENITH (+2.1%). Likewise, the uptrend in NIGERIAN BREWERIES (+1.4%) and CADBURY (+10.2%) moved the Consumer Goods index 0.6% higher. On the contrary, the Industrial Goods index fell 1.3% on the back of depreciation in DANGCEM (-2.5%) while the Insurance index slid 0.8% on account of weaker sentiment in MANSARD (-5.0%) and NEM (-2.8%). 

Market Breadth Improves
Investor sentiment improved today as reflected in the market breadth (advancers/decliners ratio) which settled at 0.9x (from 0.7x yesterday) on account of 18 advancing stocks against 20 decliners. MOBIL (+10.2%), CADBURY (+10.2%) and PORTPAINT (+9.4%) led the gainers while MANSARD (-5.0%) UAC-PROP (-4.9%) and NASCON (-4.9%) led the laggards.  As expected, the attractive prices of some value stocks prompted bargain hunting by short-term investors. Notwithstanding the short-term driven momentum today, we expect optimism to be sustained in subsequent sessions following the agreement reached today by OPEC members to cut production by 1.2mb/d. The announcement already triggered a rally in oil prices to US$50.00/b – a level we think is positive for the domestic oil & gas and banking sectors.