Equity market: Attractive entry prices arise following sustained sell offs

 

The bearish performance in the local bourse was sustained this week as the All Share Index shed 1.6 percent to settle at 40,841.14 points while year to date return further moderated to 6.8 percent. Consequent on this, investors lost N239.6 billion in value as market capitalization decreased to N14.8 trillion. The drag to market performance this week can be largely attributed to sustained sell offs in bellwethers – Dangote Cem3nt (-2.0 percent), Zenith Bank (-6.8 percent) and Guaranty Trust Bank (-1.3 percent). On the contrary, market activity level strengthened as average volume and value traded rose 14.6 percent and 59.6 percent to 440.9 million units and N6.6 billion respectively. The most traded stocks by volume for the week were Zenith Bank (197.4 million), Access Bank (180.1 million) and UBA (166.2 million) while Guaranty Trust Bank (N5.6 billion), Zenith Bank (N5.6 billion) and Nestle Nigeria (N2.9 billion) were the most traded stocks by value.
The market kicked off the week on a negative note, paring gains from the previous session as the benchmark index fell 1.6 percent and 0.3 percent on the first two trading days. Losses in Dangote Cement, Guaranty Trust Bank and Zenith Bank were the major drags to market performance. By Thursday, the bearish trend was halted against the backdrop of increased bargain hunting in Dangote Cement, ETI and UBA which lifted the benchmark index by 0.3 percent. To close the week, the bears returned to the market, offsetting the previous day’s gain, thus dragging performance down 8 basis points
Across sectors, performance was equally bearish. The Oil & Gas index led laggards, down 2.8 percent following losses in Mobil Nigeria (-8.5 percent) and Total Nigeria (-5.0 percent). The Industrial Goods and Banking indices followed suit, down 2.1 percent and 1.3 percent respectively as investors sold off positions in Dangote Cement (-2.0 percent), Lafarge Africa (-2.4 percent), Zenith Bank (-6.8 percent) and Guaranty Trust Bank (-1.3 percent). Similarly, sell pressures in Nigerian Breweries (-0.8 percent), International Breweries (-9.7 percent), Lafarge Africa (-7.0 percent) and NEM Insurance (-1.8 percent) drove the Consumer Goods and Insurance indices down 1.1 percent and 0.1 percent respectively.
Investor sentiment weakened in the week as market breadth (advance/decline ratio) fell to 0.4x from 1.2x recorded the prior week following 19 stocks that advanced against 50 stocks that declined. The best performing stocks were LASACO Insurance (+21.2 percent), May & Baker (+14.3 percent) and Law Union Insurance (+12.3 percent) while Japaul Oil (-23.7 percent), Unity Bank (-17.2 percent) and GlaxoSmithKline (-14.7 percent) led the losers chart.