Equities Open Soft on Blue Chips Sell-down

Photo L-R: Bosun Adekoya, Member, NSE Lagos/Ibadan Branch Council; Oscar Onyema, Chief Executive Officer, The Nigerian Stock Exchange (NSE); Abimbola Ogunbanjo, President/Chairman, NSE Lagos/Ibadan Branch Council; and Mojisola Adeola, Council Secretary, at the Annual General Meeting (AGM) of NSE Lagos/Ibadan Branch Council at The Exchange today.

The Nigerian equities market closed soft on the first trading day of the week as investors continue to trade cautiously despite the attractive upside value stocks currently presents. Although sentiment swung positive with more gainers than losers, sell down pressure recorded in blue-chip counters -- DANGOTE CEMENT (-0.6%) and NIGERIAN BREWERIES (-0.7%) led to a mild 3bps decline in the benchmark equity All Share Index to 29,168.04 points, whilst market capitalization declined N2.5bn to N10.0tn.

Market activity also improved significantly as aggregate volume and value of trades rose 2.1% and 139.0% to 1.0bn units and N14.6bn respectively. The massive surge in activity was majorly due to the unusually huge trades recorded in GUARANTY (N7.7bn) and NIGERIAN BREWERIES (N4.2bn), which cumulatively accounted for 81.8% total value traded today and equivalent to 1.0% of the shares outstanding of both stocks.

Oil & Gas Index Leads Advancers
Sector indices performances' were mixed today as the Oil & Gas index (1.3%) led advancers due to the sustained rally in OANDO (10.1%), while the Insurance index followed with 0.5% gain against the backdrop of the gains recorded in MANSARD (+0.8%), NEM INSURANCE (+4.5%).

On the flipside, the Industrial Goods led laggards, spurred by the extended sell down in DANGOTE CEMENT (-0.6%). The Banking Index also weakened 0.1% on account of the depreciation in the share prices of GUARANTY (-0.3%) and WEMA (-4.0%) whilst the Consumer Goods index declined a marginal 4bps -- pressured by NIGERIAN BREWERIES (-0.7%).

Market Sentiment Improves as Bargain Hunting Deepens
Investors' sentiment measured by market breadth (advancers vs. decliners ratio) improved to 1.7x with 25 gainers against 15 losers'. Top gainers in the market today include: OANDO (+10.1%), CCNN (+10.1%) and FIDSON (+10.0%) whilst CAVERTON (-4.7%), WEMA (-4.0%) and EVANSMED (-3.7%) led losers. Despite the marginal weakness in the All Share Index today, the positive sentiment reflects that some bargain hunting activities are still taking place in the market.

Although macroeconomic fundamentals have considerably weakened which reflected in 3rd quarter earnings, most of the sell-offs are already overdone and prices are attractive. Nevertheless, the cautiousness of investors towards the market now suggests most of the upsides may not be realized in the short term but in the medium to long term as fiscal policy direction gradually unfolds to lift consumer and investor confidence.