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Afrinvest Stock Recommendation For The Week 290719

Stock PICKS	1523 VIEWS
Stock PICKS
1523 VIEWS

Monday, July 29, 2019 / 10:20AM / By Afrinvest Research

Market Last Week (Our Observation)

The downtrend in the local bourse continued as the NSE All Share Index (ASI) suffered losses on 4 of 5 trading sessions. However, the benchmark Index closed flat W-o-W to settle at 27,918.59 points while YTD loss stood at -11.2%. Investors lost N444.6m in value as market capitalisation decreased to N13.6tn.
Performance across sectors was poor as 4 of 6 indices under our coverage recorded losses. The Consumer Goods index led the gainers, up 0.7% while the Industrial Goods index trailed, rising 0.1%. On the flip side, the Insurance index led the laggards, down 0.9% while the Banking index declined 0.7%. Similarly, the Oil & Gas and AFRI-ICT Indices lost 0.2% and 0.4% respectively.
The top performing stocks were NPFMCRFB (+14.2%), BOCGAS (+11.7%) and WAPCO (+11.2%) while LINKASSURE (-20.3%), INTBREW (-18.3%) and FORTE (-10.7%) led the losers.

Market This Week (Our Expectations)

The Afrinvest Weekly Sentiment Indicator strengthened to 2.4x points from 1.9x points recorded in the previous week.
This week, we expect that investors would resume bargain hunting due to sharp losses in some stocks recently, especially those with positive H1:2019 earnings.

Weekly Stock Watch for Technical Traders

Market Analysis… NSE ASI Breaks 3-week Support Level

The NSE All Share Index, declined marginally to print at 27,918.59 points. As has been the case recently, the Negative Directional Movement Index (-DMI) is not only outstripping the Positive Directional Movement Index (+DMI), it also 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 anticipate the index will 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.

Our BUY Recommendation

Last week, our top pick was WAPCO, and guess what? The stock gained 11.2% W-o-W. We’re that good! Based on last week’s observations, NIGERIAN BREWERIES (ADX: 32.55; MFI: 5.59; %B: -0.72), DANGCEM (ADX: 31.90; MFI: 25.92; %B: 0.30), CUTIX (ADX: 26.76; MFI: 44.77; %B: 0.27), OANDO (ADX: 26.34; MFI: 57.64; %B: 0.36) and WEMABANK (ADX: 28.17; MFI: 77.25; %B: 0.74) 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 NIGERIAN BREWERIES 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 NESTLE (ADX: 37.57; MFI: 92.12; %B: 0.76), TRANSCORP (ADX: 44.98; MFI: 90.03; %B: 0.55), CAP (ADX: 52.13; MFI: 88.29; %B: 0.36) and CADBURY (ADX: 42.91; MFI: 84.90; %B: 0.56) 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). Strongest in downtrend and closest to the overbought region, NESTLE emerges top potential loser; we have no strings attached.

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