Nigeria stocks bow to profit taking as benchmark index drop 2.8%

Nigeria’s equities market closed negative Monday, the first trading session of the week as the benchmark index dipped 2.8 percent to close at 35,844.00 points, paring year-to-date return to +33.4 percent.

Stocks lost N351.8 billion in value as market capitalization fell to N12.4 trillion.

Monday’s performance was dragged by profit taking in bellwethers – DANGCEM (-5.0%), GUARANTY (-5.0%), ZENITH (-4.9%) and NIGERIAN BREWERIES (-5.0%). Similarly, activity level largely waned as volume and value traded declined 6.7 percent and 35.3 percent to close at 490.2 million and N5.3 billion respectively.

Most financial analysts had predicted activities in the nation’s bourse would be trailed by profit taking this week following fund managers window dressing.

Ambrose Omordion Omordion, the chief operating officer, InvestData Ltd., told the News Agency of Nigeria (NAN) in Lagos that the market would witness profit taking after month-end dressing by fund managers.

He said that the market would experience mixed performance due to expected account rebalancing by fund managers which would lead to profit taking in preparation for the month of August.

Omordion said that the mixed performance would not last for longtime due to investors’ anticipation of more improved half-year earnings yet to be released in the market. He attributed market growth last week to investors’ last minute positioning for earnings expectations, as most of the earnings released last week beat market and analysts expectations.

He equally noted that positive economic data released by the National Bureau of Statistics (NBS) contributed to the market growth.

Analysts at Afrinvest equally called for profit taking in the week.

“Although today’s performance was characterized by profit taking in stocks that appreciated in prior sessions, we expect market performance to be majorly driven by H1:2017 corporate earnings releases this week,” they noted.

Market performance across sectors was mixed as three of five indices closed in the red. The industrial goods index fell 4.7 percent due to losses in DANGCEM (-5.0%), while the banking index depreciated 3.8 percent on account of profit taking in GUARANTY (-5.0%) and ZENITH (-5.0%).

Similarly, the consumer goods index slid 0.4 percent on the back of losses in NIGERIAN BREWERIES (-2.7%). On the other hand, the insurance index led gainers, up 1.2 percent on as a result of price appreciation in CONTINSURE (+4.4%) and NEM (+4.7%), while gains in OANDO (+2.3%) bolstered the oil & gas index 0.3 percent higher.

Investor sentiment as mirrored by the market breadth (advancers/decliners’ ratio) waned to 0.8x compared to last week Friday (1.0x) as 22 stocks advanced against 27 stocks that declined. Today’s best performing stocks were DANGSUGAR (+10.2%), NASCON (+10.1%) and CILEASING (+8.7%) while the worst performers were CCNN (-9.7%), DANGCEM (-5.0%) and GUARANTY (-5.0%).