Monday, August 26, 2019 / 11:02AM / By Afrinvest Research
Market Last Week (Our Observation)
The local bourse halted its extended bearish run last week as the All Share Index gained 3.2% W-o-W to settle at 27,800.17 points while the YTD loss eased to -11.6%. Consequently, investors gained N403.2bn as market capitalisation rose to N13.5tn.
Performance across sectors was bullish as 5 of 6 indices under our coverage advanced W-o-W. The Banking index gained the most with a 9.2% increase. The Consumer and Industrial Goods indices trailed, advancing 4.0% and 2.0% respectively. Similarly, the Oil & Gas and AFR-ICT indices gained 1.6% and 1.3% respectively. Conversely, the Insurance index emerged the lone loser, down 1.4%.
The top performing
stocks for the week were ETI (+33.3%), OANDO (+20.9%)
and FIDELITY (+20.0%) while OKOMU(-18.1%), NCR (-14.7%)
and LASACO (-12.1%) were the laggards.
Market This Week (Our Expectations)
The Afrinvest Weekly Sentiment Indicator further strengthened to 4.2 points from 2.3 points recorded last week, due to the improvement in the breath sentiment.
We believe that the bullish run would be short-lived due to sustained weak investor sentiment in the market.
Weekly Stock Watch for Technical Traders
Market Analysis.. NSE ASI Halts Bearish Run
The NSE All Share Index advanced 3.2% to print at 27,800.17 points. Despite the positive performance, the Negative Directional Movement Index (-DMI) still outstrips the Positive Directional Movement Index (+DMI) and 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 in the near term.
Our BUY Recommendation
Last week, 4 out of our 5 top picks trended northward - NIGERIAN BREWERIES (+1.4%), OANDO (+20.9%), WEMABANK(+7.4%) and DANGCEM (+1.5%). Based on last week's observations, CUTIX (ADX: 26.76; MFI: 14.92; %B: 60.98, WAPCO (ADX: 48.93; MFI: 33.17; %B: 38.71), OANDO (ADX: 26.34; MFI: 47.55; %B: 103.79), DANGCEM (ADX: 31.90; MFI: 57.02; %B: 69.75) and WEMABANK (ADX: 28.17; MFI: 59.40; %B: 88.03) 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 CUTIX 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: 96.05; %B: 53.92), STANBIC (ADX: 41.06; MFI: 93.84; %B: 39.31), UCAP (ADX: 38.56; MFI: 86.32; %B: 38.50) and TRANSCORP (ADX: 44.98; MFI: 84.71; %B: 81.08) top our wishlist 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). Closest to the overbought region and with a strong ADX, NESTLE emerges top potential loser.
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