Nigerian stocks yet to rally as profit taking pares market cap by N150bn

The prolonged bearish run in the Nigerian equities market continued Monday against analyst prediction of another round of rally on attractive entry prices in medium to large caps, which would encourage investors to seek bargain hunting.

Indeed profit taking pared market capitalization by N150 billion to N14.6 trillion while the benchmark index, the NSEASI shed 1.0 percent to close at 40,429.18 points.

As a result, year-to-date (YTD) return moderated to 5.7 percent.

The day’s negative performance was largely influenced by sell-offs among large-cap stocks led by DANGCEM (-1.1%), UNILEVER (-8.0%) and WAPCO (-7.2%). In line with market performance, activity level declined as volume and value traded trended lower, down 42.8 percent and 15.4 percent respectively.

The top traded stocks by volume were FBNH (29.6m), SKYE (23.1m) and FCMB (23.0m) while NIGERIAN BREWERIES (N2.6bn), ZENITH (N606.9m) and GUARANTY (N448.9m) were the top traded by value.

The insurance index emerged the lone gainer, as sector performance remained largely bearish as three of five indices under coverage closed southwards with the oil and gas indices closing flat.

The insurance index closed up 0.9 percent on account of gains in MANSARD (+5.0%) and CONTINSURE (+3.9%).

The industrial goods index led laggards down 3.9 percent due to selloffs in DANGCEM (-1.1%) and WAPCO (-7.2%) following an underwhelming FY:2017 result in the latter with a loss after tax of N34.6 billion. The banking index trailed, down 0.9 percent, due to profit taking in GUARANTY (-1.4%) and ZENITH (-1.5%).

Lastly, the consumer Goods index closed southwards, shedding 0.9% as losses in UNILEVER (-8.0%) and DANGFLOUR (-4.7%) accounted for this bearish performance.

Investor sentiment as measured by market breadth (advance/decline ratio) improved from 0.4x recorded in the previous session to 0.6x consequent on 17 stocks that advanced against 30 stocks that declined.

The top performing stocks for the day were LEARNAFRICA (+9.3%), JAPAULOIL (+8.9%) and CHAMPION (+8.8%) while CILEASING (-9.3%), SKYE (-8.5%) and UNILEVER (-8.0%) led the laggards for the day.

Despite the negative performance, analysts say the losses in large and mid-cap stocks on the day present attractive entry opportunities for investors, adding that they do not rule out possibility of bargain hunting in the near term ahead of the release of Q1:2018 results.