Stock Market: Near Term Uncertainty to Drive Bearish Sentiment –Analysts
In their projections for the week, analysts said that near term uncertainties will continue to drive bearish sentiment in the Nigerian stock market this week.
Chapel Hill Denham reveal this projection in its West Africa Market Report on Monday.
Largely bearish investment analysts however advised Cautious trading in the equities segment of the market
After two consecutive weeks of bullish performance, sell sentiment returned to the Nigerian local bourse last week, as local investors panicked and took profits on equity positions.
“In our view, capital market uncertainty is linked to an expected reversal of yields in the fixed income market caused the bearish performance on all trading days during the week”, Chapel Hill Denham stated.
Consequently, the NSE All Share Index fell by 2.53% week on week (wow) to 34,250.74 points while the stock mark year-to-date return fell to 27.50%.
The persistent bearish mood also saw the stock market capitalization reduced to N17.902 trillion.
On the stock trading league for the week, FTN Cocoa Plc (+51.72% wow to N0.44), Union Diagnostics Plc (+16.00% wow to N0.29), and Okomu Oil Plc (+10.00% wow to N10.00) were the best-performing stocks.
On the flipside, Regency Alliance Assurance (-16.67% wow to N0.20), University Press Plc (-14.29% wow to N1.26), and Neimeth Pharmaceuticals (-12.35% wow to N2.20) were the week’s laggards.
Analysts explained that stock market activity was mixed last week, as average volume rose by 37.16% wow to 451mn units while average value traded fell further by 15.22% wow to N4.180bn.
Top traded stocks by volume during the trading week were Guaranty Trust Bank (4.760bn), Zenith Bank (4.740bn) and UBA Plc (+2.723bn).
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Meanwhile Jaiz Bank Plc (410mn units), UBA Plc (329mn units) and FBN Holdings (216mn units) were the most traded by volume.
Chapel Hill Denham stated in the report that performance across indices was bearish, as all five coverage sectors closed the week lower.
The NSE industrial goods was the week’s top loser, shedding 4.96% wow on losses in Dangote Cement Plc (-8.04% wow) and Lafarge Africa (-10.65% wow).
Similarly, the NSE banking and the NSE insurance indices lost 2.93% and 1.82% respectively, on price decline in Zenith Bank (-5.22% wow), Access Bank (-5.85% wow), and Regency Assurance (-16.67% wow).
Also, the NSE consumer goods and the NSE oil & gas indices fell by 1.55% and 0.25% respectively linked to losses in Dangote Sugar (-6.58% wow), Flour Mills (-5.00% wow), and Ardova Oil (-9.69% wow).
“This week, we expect the near term uncertainty to continue to drive bearish sentiment on the market.
“As a result, we advise cautious trading on the equity market this trading week.
“On our recommendations, in the Banking sector, we like Access Bank, Zenith Bank, Guaranty Trust Bank, Stanbic IBTC Holding, United Bank for Africa, and FBNH.
“In the consumer goods sector, we like Nigerian Breweries, Dangote Sugar Refinery, Intbrew, Nestle, UAC of Nigeria, and FCWamco.
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“We also have buy ratings on Dangote Cement and Lafarge in the cement sector, Custodian & Allied in the insurance sector, Seplat in the Oil & Gas sector, and MTNN in the telecommunication sector”, Chapel Hill Denham stated.
