January 29, 2018 /1:25 PM / Afrinvest Research
Market Last Week (Our Observation)
· Performance of the local bourse was bearish last week as the All Share Index (ASI) fell 2.9% W-o-W to 43,773.76 points while YTD gain moderated to 14.5%.
· Across sectors, performance was mixed as 3 of 5 indices closed in the red. The Banking index topped the losers chart, down 6.4% W-o-W, followed by the Insurance index which declined 3.3% W-o-W while the Industrial Goods index closed 2.0% lower W-o-W. On the flip side, the Consumer Goods index was the top gainer, up 2.1% W-o-W while the Oil & Gas index added 0.1% W-o-W.
· The best performing stocks this week were WAPIC (+10.9%), DANGSUGAR (+9.8%) and NASCON (+9.6%) while DIAMOND (-26.1%), CHAMPION (-20.7%) and TRANSCORP (-18.0%) were the worst performers.
Market this Week (Our Expectation)
· The Afrinvest Weekly sentiment indicator weakened to 1.4 points from 1.9 points recorded the prior week following a decline in market breadth.
· This week, we anticipate further sell-offs in early trades as investors continue to book profits in stocks that have rallied in prior weeks. This view is further buttressed by the ASI 14- Day Relative Strength Index (RSI) – 67.7 points, which is close to the overbought region of 70.
· However, we anticipate increased buying activity from mid-week as investors take position in fundamentally sound stocks that have fallen to attractive entry prices, in anticipation of FY:2017 earnings releases.