Afrinvest Stock Recommendation For The Week 050819


Monday, August 05, 2019  / 11:00AM / By Afrinvest Research 


Market Last Week (Our Observation)

  • Bearish sentiment dragged the performance of the domestic equities market despite positive earnings releases by some companies. Hence, the All Share Index declined 1.0% W-o-W to settle at 27,630.5 points while the YTD return worsened to -12.1%. As such, investors lost N141.4bn in value as market capitalisation decreased to N13.5tn.
  • Performance across sectors was poor as 5 of 6 indices under our coverage recorded losses. The Consumer Goods index led the laggards with -5.1%, trailed by the Banking and Insurance indices which declined 1.6% apiece. Similarly, the Oil & Gas and Industrial Goods indices depreciated by 1.1% and 0.5% respectively while the AFRI-ICT index closed flat W-o-W.
  • The top performing stocks were UNITYBANK (+27.6%), CILEASIN (+21.0%) and VITAFOAM (+15.3%) while ETERNA (-19.4%), NIGERIAN BREWERIES (-16.7%) and NCR (-11.7%) led the losers.

Market This Week (Our Expectations)

  • The Afrinvest Weekly Sentiment Indicator strengthened to 2.6x points from 2.4x points recorded in the previous week.
  • Consequent on the losses recorded on three trading sessions last week, we expect to see some bargain hunting in early trades this week, supported by positive earnings releases on some stocks. Nevertheless, given the paucity of foreign portfolio participation in the local bourse, we anticipate that the lingering bearish sentiments would drive a negative close. 

Weekly Stock Watch for Technical Traders

Market Analysis… NSE ASI Sides with the Bears 

The NSE All Share Index declined 100bps to print at 27,630.5 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 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. 

Our BUY Recommendation

About last week... CUTIX, one of our BUY stocks, gained 4.0% W-o-W. Unfortunately, NIGERIAN BREWERIES — our top BUY — shed weight W-o-W. The silver lining? NB is closer to its oversold region and has more upside potential while topping, AGAIN , our BUY recommendations for this week.
Based on last week’s observations, NIGERIAN BREWERIES (ADX: 32.55; MFI: 3.98; %B: 10.7), DANGCEM (ADX: 31.90; MFI: 25.92; %B: 37.3), OANDO (ADX: 26.34; MFI: 46.02; %B: 49.09), WEMABANK (ADX: 28.17; MFI: 55.79; % B: 40.65) and WAPCO (ADX: 48.93; MFI: 73.10; %B: 64.00) 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 FLOURMILL (ADX: 44.61; MFI: 97.01; %B: 83.14), GUINNESS (ADX: 45.43; MFI: 90.32; %B: 42.46), PRESCO (ADX: 77.32; MFI: 89.15; %B: -32.92) and MOBIL (ADX: 25.79; MFI: 88.07; % B: 42.46) 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, FLOURMILL emerges top potential loser; we have no strings attached.

Proshare Nigeria Pvt. Ltd.

NB: Rate on 100M and above are negotiable and all rates are valid ONLY for fund received on/before 5th August 2019.

Proshare Nigeria Pvt. Ltd.

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Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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