Afrinvest Stock Recommendation For The Week 160919

Monday, September 16, 2019   /11:05AM  / Afrinvest Research 

Market Last Week (Our Observation)

• Last week, the domestic bourse trended upward as the ASI rose 2.3% W-o-W to 27,779.00 points while YTD loss eased to -11.6%. Similarly, investors gained N316.2bn as market capitalisation strengthened to N13.5tn. 
• Across sectors, 5 indices under our coverage gained W-o-W. The Oil & Gas and Banking indices rose 7.2% and 5.1% W-o-W respectively. Also, the AFR-ICT and Consumer Goods indices gained 3.7% and 0.6% respectively. Conversely, the Insurance and Industrial Goods indices were down 2.1% and 0.4% respectively W-o-W.
• UAC-PROP (+51.5%), FBNH (+24.1%) and SEPLAT (+15.7%) led the top performing stocks for the week while THOMASWY (-9.5%), CONTINSURE (-8.0%) and OANDO (-7.3%) led losers.

• The Afrinvest Weekly Sentiment Indicator strengthened to 4.1 points from 2.7 points recorded in the previous week.
• This week, we expect bearish sentiment to resume, although there is room for gains in fundamentally sound stocks through bargain hunting.

Weekly Stock Watch for Technical Traders 

Market Analysis... NSE ASI Reverses Bearish Performance

The NSE All Share Index gained last week as it rose 2.3% to print at 27,779.00 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, 1 closed in the green - NIGERIAN BREWERIES (+1.0%). Based on last week's observations, WEMABANK (ADX: 28.17; MFI: 14.00; %B: 52.42), CUTIX (ADX: 26.76; MFI: 15.85; %B: 21.36), NIGERIAN BREWERIES (ADX: 32.55; MFI: 31.51; %B: 63.34), OANDO (ADX: 26.34; MFI: 41.17; %B: 17.04) and DANGCEM (ADX: 31.90; MFI: 62.60; %B: 29.21), 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 WEMABANK 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 SEPLAT (ADX: 34.54; MFI: 95.19; %B: 0), PZ (ADX: 53.58; MFI: 80.93; %B: 61.18), UCAP (ADX: 38.56; MFI: 73.41; %B: 38.50) and STERLNBANK (ADX: 32.64; MFI: 73.09; %B: 49.11) 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, SEPLAT emerges top potential loser.

NB: Rate on N100M and above are negotiable and all rates are valid ONLY for fund received on/before 16th September 2019.

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