Afrinvest Stock Recommendation For The Week 091219

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Monday, December 09, 2019  / 10:10 AM / by Afrinvest Research / Header Image Credit: Afrinvest


Market Last Week (Our Observations)

    • Last week, the domestic bourse ended on a bearish note following slight profit taking after four weeks of successive gains. Consequently, the All-Share Index shed 0.5% to close at 26,855.52 points while YTD return worsened to -14.6%. Similarly, investors lost N218.2bn as market capiltalisation depreciated to N13.0tn. 
    • Sector performance was bearish as all indices under our coverage lost save the Consumer Goods index which gained 1.7% w/w. The Industrial Goods index lost the most while the Banking and Insurance indices also shed 1.2% and 0.9% respectively. Similarly, the AFR-ICT and Oil & Gas indices lost 0.9% and 0.4% respectively.
    • ROYALEX (+17.4%), UNILEVER (+17.4%) and NIGERINS (+10.0%) led gainers while CORNERSTONE (-20.3%), ARBICO (-9.8%) and IKEJAHOTEL (-9.7%) led losers. 


    Market This Week (Our Expectations)

      • The Afrinvest Weekly Sentiment Indicator weakened to 1.7 points from 2.4 points recorded in the previous week.
      • This week, we expect investors to cherry-pick stocks with sound fundamentals.

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      Weekly Stock Watch for Technical Traders

      Market Analysis... Domestic Equities Market Halts Bullish Run
      Last week, the local bourse closed on a negative note, bringing a halt to the four-week bullish trend as the NSE All-Share Index fell 0.5% W-o-W to close at 26,855.52 points. 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 continue to shed gains this week.

      Our BUY Recommendation
      Observations from last week revealed that WAPCO (ADX: 48.93; MFI: 0.00; %B: 24.15), NIGERIAN BREWERIES (ADX: 32.55; MFI: 10.90; %B: 61.93), OANDO (ADX: 26.34; MFI: 14.59; %B: 26.41), DANGCEM (ADX: 31.90; MFI: 30.84; %B: 22.79), CUTIX (ADX: 26.76; MFI: 55.66; %B: 78.28) 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 a strong trend. However, buyer's discretion is advised!

      Our SELL Recommendation
      Our observation also suggests that JBERGER (ADX: 36.11; MFI: 97.88; %B: 57.54), FLOURMILL (ADX: 44.61; MFI: 97.60; %B: 83.24), CUSTODIAN (ADX: 32.36; MFI: 93.69; %B: 57.54), and SEPLAT (ADX: 34.54; MFI: 86.21) 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 SEPLAT.

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      • NB: Rate on N100M and above are negotiable and all rates are valid ONLY for fund received on/before 9th December 2019.


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