Equities Rally on Stronger Buy Sentiment

The bullish sentiment in the Nigerian equity market was sustained as the All Share Index further appreciated 1.3% today to close at 26,407.64 points. Performance was largely driven by price appreciation in DANGCEM (+1.9%), FORTE (+10.2%), SEPLAT (+6.7%) and GUARANTY (+3.0%). Consequently, market capitalization grew N115.7bn to close at N9.1tn. Activity was however mixed as volume traded declined 45.5% to 205.3m units and value traded surged 77.4% to N4.3bn with a total of 3,275 deals.

Consumer Goods Index Emerges Lone Loser
All sector indices under our coverage closed in the green save for the Consumer Goods index which lost on account of declines in NIGERIAN BREWERIES (-2.5%) and CHAMPION (-4.2%). The Oil & Gas index (+4.4%) remained the best performing sector index today - driven by gains in FORTE (+10.2%) and SEPLAT (+6.7%) - while the Banking index (+2.3%) followed on account of strong appetite for ETI (+4.9%) and GUARANTY (+3.0%). Similarly, DANGCEM (+1.9%) and WAPIC (+4.0%) drove the Industrial Goods and Insurance indices 1.0% and 0.5% northward respectively.

FORTE in Top Gainers’ Chart for the 9th Consecutive Session
Investor sentiment strengthened further as market breadth improved to 2.9x (from 1.6x on Tuesday) with 32 stocks advancing against 11 declining stocks. The best performing stocks today were FORTE (+10.2%), VITAFOAM (+8.7%), and GLAXOSMITH (+7.1%) while FIDSON (-4.5%), CHAMPION (-4.2%), and LEARNAFRICA (-3.8%) declined the most.  We are of the view that the uptrend in FORTE is largely driven by bargain hunting while investors continue to position in SEPLAT as oil prices firm up. Yet, the rally today is more broad-based across big- and mid-sized counters with market breadth closing above 2.0x. This may suggest investors are reacting to fundamental development in the oil market (which is historically strongly correlated with market performance) or positioning ahead of the “Santa rally”. Either way, we think equities would likely continue to outperform in shorter term but medium term performance remains anchored on FX market liquidity and macroeconomic indicators.