Afrinvest Stock Recommendation For The Week 020919

Market Last Week (Our Observation)

• Last week, the local bourse recorded a negative performance, with the All Share Index (ASI) decreasing 1.0% W-o-W to 27,525.81 points. Accordingly, market capitalisation fell N133.5bn to N13.4tn while YTD loss weakened to -12.4%.
• Overall sector performance was bearish as 4 out of 6 indices under our coverage depreciated W-o-W. The Oil & Gas index led the laggards, paring 10.8%. The Banking and Consumer Goods indices trailed, declining 3.5% and 0.6% respectively while the Industrial Goods index also lost 0.3%. On the flip side, the AFR-ICT and Insurance indices were the lone gainers, up 1.3% and 1.2% respectively. 
• The top performing stocks for the week were JOHNHOLT (+19.6%), CONTINSURE (+11.5%) and UNITYBANK (+11.1%) while SEPLAT (-18.8%), UACPROP (-17.8%) and INTBREW (-15.2%) led the decliners.

Market This Week (Our Expectations)

• The Afrinvest Weekly Sentiment Indicator eased to 2.7 points from 4.2 points recorded in the previous week. 
• Following last week's performance and weak investor sentiment, we anticipate a bearish performance barring any positive catalyst that would reverse the negative sentiment in the market.

Weekly Stock Watch for Technical Traders

Market Analysis… NSE ASI Resumes Bearish Stance

The NSE All Share Index returned to its bearish stance declining 1.0% to print at 27,525.81 points. As has been the case recently, the Negative Directional Movement Index (-DMI) still outstrips the Positive Directional Movement Index (+DMI) and continues to display a super strong ADX (Average Directional Movement Index), indicating the NSEASI's reluctance to rise to glory. In the coming week, we expect the index to continue to wander within the negative territory. But why are we pessimistic? All indicators strongly suggest there are no possible triggers to herald a rebound in the near term.

Our BUY Recommendation

Last week, 2 out of our 5 top picks closed in the red while WAPCO (+1.8%) emerged the lone gainer. Based on last week's observations, DANGCEM (ADX: 31.90; MFI: 3.28; %B: 10.02, CUTIX (ADX: 26.76; MFI: 41.22; %B: 63.06), WAPCO (ADX: 48.93; MFI: 50.10; %B: 92.31), OANDO (ADX: 26.34; MFI: 58.54; %B: 70.67) and WEMABANK (ADX: 28.17; MFI: 67.61; %B: 84.11) have strong prospects for fortune in the near term. These stocks currently hover around the oversold region with respective +DMIs bullying –DMIs with >25 ADX value, signifying a strong trend. Of these, our hot pick is DANGCEM as it is set to create room for profit - a strong uptrend from the oversold region. Attention! Attention! Attention! The Nigerian market is currently not for the timorous.

Our SELL Recommendation

Previous week's observations also suggest that UCAP (ADX: 38.56; MFI: 84.54; %B: 38.50), FBNH (ADX: 59.49; MFI: 82.45; %B: 32.93), PZ (ADX: 53.58; MFI: 65.48; %B: 46.75) and TOTAL (ADX: 83.71; MFI: 55.31; %B: 30.94) top our wish list for investors yearning lean pockets. As it stands, these stocks are tremendously heading for the deep with –DMIs outstripping +DMIs and stronger ADX values too (well above 25). Closest to the overbought region and with a strong ADX, UCAP emerges top potential loser.

• NB: Rate on ₦100M and above are negotiable and all rates are valid ONLY for fund received on/before 2nd September 2019.