Market Extends Losses on Weakened Appetite for Large Caps

Nigerian Bourse extended losses to third trading session as large cap stocks declined despite late traction gained in small- and mid-cap counters.  The All Share Index weakened 0.3% on Tuesday to close at 27,034.05 points, bringing YTD return to -5.6%, while market capitalization shaved N23.8bn to N9.3tn. Benchmark index performance mainly reflected profit-taking activities on Banking and Consumer Goods bellwether stocks - GUARANTY (-2.6%) and NIGERIAN BREWERIES (-2.3%). Market activity improved mildly with value and volume traded trending higher by 5.9% and 12.1% to 170.7m and N2.4bn respectively.

Sector Indices Performance Mixed
Performance across sector indices was largely mixed as three indices rebounded while two declined. The Industrial Goods index topped advancers, rising 1.2% against the backdrop of gains in WAPCO (+3.1%); followed by the Oil & Gas index (+0.2%) which was driven by TOTAL (+3.1%), while sustained rally in NEM (+5.0%) and CONTINSURE (+5.0%) drove the rebound in the Insurance index (+0.8%). However, the Banking Index slid 1.0% to halt a 3-day gaining streak as a result of profit-taking in GUARANTY (-2.6%) and ECOBANK (-2.0%), while the Consumer Goods index equally shed 1.0% as a result of sell pressure on NIGERIAN BREWERIES (-2.3%).

Market Breadth Turns Positive
Market Breadth, taken as a ratio of advancers to decliners, turned positive to 1.4x as 24 stocks advanced while 17 declined. Top gainers include NEM (+5.0%), CONTINSURE (+5.0%), STANBIC (+4.6%), AGLEVENT (+4.4%) and UNIONDICON (+4.3%) while GLAXOSMITH (-9.7%), UNITYBNK (-8.8%), FCMB (-5.5%), ETERNA (-5.0%) and TRANSEXPR (-4.8%) led losers. We expect market performance to stay restrained owing to weak data releases while investors continue to await FX policy. We believe equities investment in the current recessionary period requires a long term perspective despite seeming cheap valuation.