Nigerian stocks halt two-day bear trend as market rebounds 0.10% on bargain hunting

Bargain hunting in market bellwethers – NESTLE (+5.0%) and ZENITH (+2.6%), as well as DANGSUGAR (+2.2%), helped halt two-day bearish performance at the Nigerian equities market Tuesday.

The local bourse rebounded with the benchmark index, the NSEASI, gaining 10bps to settle at 40,802.78 points while year-to-date (YTD) return strengthening to 6.7 percent.

Accordingly, market capitalization gained N14.0 billion to improved to N14.7 trillion.

Despite the bullish performance, activity level weakened as volume and value traded dipped 20.3 percent and 57.1 percent to 246.6 million units and N3.2 billion respectively. Top traded stocks by volume were TRANSCORP (35.4m), ZENITH (24.6m) and CAVERTON (19.6m) while GUARANTY (N805.3m), ZENITH (N682.3m) and STANBIC (N263.1m) were the top traded stocks by value.

Sector performance was largely bullish as three of five sectors under watch closed in the green. The oil & gas index was the top gainer, up 0.8 percent due to buying interest in FORTE (+10.2%). The consumer goods index, inched 0.7 percent higher on the back of gains in NESTLE (+5.0%) and DANGSUGAR (+2.2%).

Similarly, the banking index appreciated 0.5 percent as investors took positions in ZENITH (+2.6%), UBA (+0.9%) and ACCESS (+0.9%).

On the other hand, the industrial goods index led laggards shedding 0.4 percent as a result of sell-offs in WAPCO (-0.8%) following the negative Q1 2018 earnings report released the previous day.

Lastly, the insurance index lost 0.4 percent on account of price depreciation in CONTINSURE (-4.8%) and MANSARD (-2.5%).

Investor sentiment as measured by market breadth (advance/decline ratio) increased to 1.0x from 0.8x recorded in the previous session as 26 stocks advanced against 25 decliners.

The day’s top performers were FORTE (+10.2%), HONEYFLOUR (+6.0%) and NESTLE (+5.0%) while FIDSON (-9.6%), JBERGER (-5.0%) and CHAMPION (-5.0%) were the worst performing stocks.

In line with analysts’ expectations, the market performed positively on the day, driven by investor reaction to positive Q1 2018 results. The analysts specifically see market performance being dictated in the near term by Q1 earning releases.

Higher oil revenues have failed to lift stocks in the past one and a half months, just as full year earnings season doing little to move the market up.

However, analysts see Dangote Cement, the largest company in the NSE by market capitalization, reporting a 29 percent rise in profit after tax in Q1 2018, being a major catalysts going forward to drive stocks higher.