Afrinvest Stock Recommendation For The Week 090919


Monday, September 09, 2019   /10:03AM  / By Afrinvest Research 


Market Last Week (Our Observation)

  • Last week, the domestic bourse recorded a bearish performance as the All Share Index (ASI) declined 1.4% W-o-W to 27,146.57 points. Accordingly, market capitalisation fell N184.5bn to N13.2tn while YTD loss weakened to -13.6%.
  • Performance across sectors was largely bearish as 4 of 6 indices under our coverage depreciated W-o-W. The Insurance and Banking indices gained 0.8% and 0.2% W-o-W respectively. Conversely, the AFR-ICT and Consumer Goods indices led laggards, paring 1.3% apiece. The Industrial Goods and Oil & Gas indices trailed, declining 1.0% and 3bps.
  • The top performing stocks for the week were CORNERSTONE (+28.6%), INTBREW (+23.1%) and UACN (+21.0%) while UPL (-18.2%), IKEJAHOTEL (-18.2%) and TRIPPLEG (-16.2%) led the decliners.

Market This Week (Our Expectations)

  • The Afrinvest Weekly Sentiment Indicator remains unchanged at 2.7 points recorded in the previous week.
  • This week, we expect the bearish momentum to continue although there is room for gains due to opportunities for bargain hunting in fundamentally sound stocks.

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 Weekly Stock Watch for Technical Traders

Market Analysis... NSE ASI Sustains Bearish Performance

The NSE All Share Index sustained its bearish performance as it fell 1.4% to print at 27,146.57 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

A week ago, out of our 5 picks, 2 closed in the green - WAPCO (+1.8%) and OANDO (+5.1%). Based on last week's observations, DANGCEM (ADX: 31.90; MFI: 0.00; %B: 7.44, OANDO (ADX: 26.34; MFI: 45.45; %B: 100.70), CUTIX (ADX: 26.76; MFI: 47.58; %B: 31.54), WEMABANK (ADX: 28.17; MFI: 69.68; %B: 47.82) and NIGERIAN BREWERIES (ADX: 32.55; MFI: 76.70; %B: 30.60), and 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 INTBREW (ADX: 27.67; MFI: 90.30; %B: 82.92), STANBIC (ADX: 41.06; MFI: 84.14; %B: 62.13), CUSTODIAN (ADX: 32.36; MFI: 82.55; %B: 97.34) and UCAP (ADX: 38.56; MFI: 81.53; %B: 38.50) 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, INTBREW emerges top potential loser.
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  • NB: Rate on N100M and above are negotiable and all rates are valid ONLY for fund received on/before 9th September 2019.

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