Afrinvest Stock Recommendation For The Week 161219

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Monday, December 16, 2019   /12:05 PM  / By Afrinvest Research / Header Image Credit: Afrinvest

 

Market Last Week (Our Observations)

  • Last week, the local bourse closed in the red extending the previous week's losses as the All-Share Index (ASI) shed 1.2% w/w to settle at 26,536.21 points. As a result, YTD loss worsened to -15.6% while market capitalisation declined by N218.2bn to N12.8tn.
  • Sector performance was bearish as 4 of 6 indices under our coverage lost. The AFR-ICT index led decliners, down 1.3% while the Banking and Industrial Goods indices trailed, declining 1.2% apiece. The Consumer Goods index also closed 0.5% lower. On the flip side, the Insurance and Oil & Gas indices rose 3bps apiece w/w.
  • The best performing stocks for the week were PRESCO (+14.9%), DANGSUGAR (+10.3%) and MANSARD (+9.1%) while CHAMS (-18.9%), UNIONDAC (-15.4%) and GLAXOSMITH (-12.5%) led laggards.


Market This Week (Our Expectations)

  • The Afrinvest Weekly Sentiment Indicator remained unchanged at 1.7 points 
  • This week, we expect market performance to remain bearish due to continued sell-offs.

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Weekly Stock Watch for Technical Traders


Market Analysis... Domestic Equities Market Extends Losses


Last week, the local bourse closed on a negative note, extending previous week losses as the NSE All-Share Index fell 1.2% w/w to close at 26,536.21 points. However, the negative Directional Movement Index (-DMI) outperforms the positive Directional Movement Index (+DMI) and maintained a strong ADX (Average Directional Movement Index), indicating a possibility that the NSE-ASI may shed gains this week.


Our BUY Recommendation

Observations from last week revealed that WEMABANK (ADX: 28.17; MFI: 11.38; %B: 24.42), OANDO (ADX: 26.34; MFI: 12.69; %B: 30.46), DANGCEM (ADX: 31.90; MFI: 13.62; %B: 15.34), WAPCO (ADX:48.93; MFI: 18.40; %B: 69.43), CUTIX (ADX: 26.76; MFI: 56.13; %B: 9.05) all have prospects for gains this week. These tickers currently hover around the oversold region with their +DMI outperforming -DMI with >25 ADX values, indicating strong trend. However, buyer's discretion is advised!


Our SELL Recommendation

Our observation also suggests that GUINNESS (ADX: 45.43; MFI: 95.83; %B: 47.51), SEPLAT (ADX: 34.54; MFI: 94.98; %B: -), STERLING (ADX: 32.64; MFI: 94.29; %B: 46.25), and MOBIL (ADX: 25.79; MFI:86.39; %B: -32.92) are the tickers most likely to record losses. These stocks are on the downtrend with -DMI outstripping +DMI and strong ADX values (>25). Our potential top loser, which is closest to the overbought region with a high ADX is GUINNESS.


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


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