Nigerian equities retreat as bears take over after long gaining streak

Following seven positive consecutive sessions recorded at the equities segment of the Nigerian Stock Exchange, trading activities resumed this week bearish as investors embarked on profit taking.

Losses in Dangote Cement (-2.5%), Seplat (-8.0%) and Wapco (-6.3%) dragged the All Share Index (ASI) 0.9 percent southwards to settle at 30,732 points.

 Consequently, year-to-date loss increased to 2.2 percent as market capitalization declined by N101.6 billion to settle at N11.5 trillion.

However, activity level strengthened as volume and value traded increased by 66.0 percent and 47.0 percent to 499.2 billion units and N5.5 trillion respectively.

The top traded stocks by volume were Diamond (239.4m units), Guaranty (119.3m units) and Zenith (26.1m units) while top traded stocks by value were Guaranty (N3.8bn), Zenith (N563.2m) and Diamond (N497.9m).

Sector performance was mixed albeit negatively skewed, as only 2 of 5 major sectors closed in the green.

The insurance index advanced the most up 1.5 percent on the back of gains in NEM Insurance (+4.8%), Linkage Assurance (+8.9%) and Wapic Insurance (+5.0%). Similarly, the industrial goods index inched northwards by 1.0 percent following modest gains in Cement Company of Northern Nigeria (+7.2%).

 On the flipside, the oil and gas index led the losers, down 4.5 percent following price depreciation in Seplat (-8.0%) and Oando (-1.1%) while the banking index closed in the red on the back of losses in Unity Bank (-4.4%) and Wema Bank (-1.6%).

 However, the consumer goods index closed flat as trades within the sector were unable to move in index.

Investor sentiment measured by market breadth (advance/decline ratio) weakened to 0.7x as 13 stocks advanced against the 18 stocks that declined.

The top outperforming stocks for the day were Linkage Assurance (+8.9%), ABCTRANS (+7.4%) and Cement Company of Northern Nigeria (+7.2%), while E-transact (-8.7%), Seplat (-8.0%) and Resort Savings and Loans (-7.7%) were the top underperforming stocks.

Analysts at Afrinvest expect the bearish performance to persist into Tuesday’s trading session, whilst maintaining a near-term bearish outlook for the domestic equities market.