Nigerian stocks edge lower 0.84% as sell-offs trail bellwethers

Nigerian stocks started the week Monday on the low as losses in market bellwethers – NESTLE (-3.2%), DANGCEM, (-0.6%) and NIGERIAN BREWERIES (-2.0%) – dragged benchmark index, the NSEASI, down by 84bps to close at 40,677.61 points.

The bourse’s year-to-date (YTD) return consequently contracted to 6.4 percent, indicating market rally is a long way off, given the onset of campaigns for next year general election, which are expected to take a toll on the market.

Specifically, total losses by stocks amounted to N124.9 billion on the day as market capitalization fell to N14.7 trillion.

Market’s general activity level, however, was mixed as volume of shares traded grew 2.0 percent to 218.8 million units while value of shares traded dipped by 47.3 percent to N2.2 billion.

The top traded stocks by volume were UBA (60.4m), FCMB (17.5m) and SOVERENIN (12.4m) while the top traded stocks by value were UBA (N706.6m), NESTLE (N168.9m) and ZENITH (N159.4m).

Sector performance was largely bearish as all the indices under coverage save for the oil & gas index closed in the red. The insurance index led laggards, down 1.7 percent, resulting from losses in MANSARD (-4.9%) and CUSTODIAN (-3.7%), which dragged the index lower. The consumer goods index trailed, shedding 1.6 percent as declines in NESTLE (-3.2%) and NIGERIAN BREWERIES (-2.0%) dragged the index.

Similarly, sell-offs in ETI (-1.7%) and DANGCEM (-0.6%) led to a pullback of 0.4 percent and 0.2 percent in the banking and industrial goods indices respectively. On the flipside, the oil & gas index closed flattish, up a marginal 1bp, as buying interest in ETERNA (+1.0%) offset losses in OANDO (-4.9%).

Investors sentiment measured by market breadth (advance/decline ratio) weakened to 0.3x from 0.7x recorded last Friday as 11 stocks advanced while 34 stocks declined.

The day’s top gainers were CAVERTON (+5.0%), STERLING (+3.8%) and MBENEFIT (+3.6%) while CILEASING (-9.4%), FIRSTALU (-8.9%) and JAPAULOIL (-7.5%) led the laggards.

Despite the day’s bearish performance, analysts maintained their bullish outlook for the market hinged on the existence of bargain hunting opportunities in large and mid-cap stocks.