Market Update 14

The equity market had a negative outing last week after trying to break out from the pennant formation on the first trading day of that week. The weak sentiments recorded across the market was attributed to investors siting on the fence to see the reforms strategies and policies of the in-coming government. At the same time analyzing the implication of CRR harmonisation of the CBN at 31 percent on the banking sector and the economy at large. The performance indicators, the All Share index and market capitalisation dropped 0.49 percent to reverse the 0.15 percent gain recorded in the previous week as it closed at 34,272.09 and N11.64 trillion respectively. These brought the year-to-date performance of the market to -1.12 per cent. Attempt by the market trying to bottom out last week was haltedon the fourth day, due to low volume and weak gains. The market is still in a pennant flag formation which is a continuation pattern, signaling that accumulation is ongoing in the market, especially in equities that are selling at a discount of its intrinsic value.  

NSE ASI

 NSEASI closed above the lower band by 31.3 per cent. Bollinger Bands are 79.99per cent narrower than normal. The narrow width of the bands suggests low volatility as compared to NSEASI's normal range. Therefore, the probability of volatility increasing with a sharp price has increased for the near-term. The current value of RSI is at 52.02, which suggests that the market is still strong, regardless of the bear transition.

Market breadth also closed negative in the last three trading days. Generally, the market's mood remained negative last week as investors maintained sideline positions. The index opened and was hitting the lower end of 34,000 threshold. In the same moderating trend, the Market capitalisation dropped about N0.56 billion to close at N11.57 billion last week.

Equally, all sectoral indices closed in the red for the week under review, except for the NSEINS that recorded weekly gains of 0.99 percent while NSEOILGAS led the sectoral losers' chart with -1.93 percent weekly returns.  

Excluding the 1.57billion cross deal in LASACO, the market recorded lower level of transaction last week compared to the previous weeks' level - implying slow growth in market trades despite the declining prices. In all, volume and value of trades increased by 81% and 11% respectively relative to the previous week's level. At the close of trading activities last week, 2.94 billion shares valued at N16.04 billion were exchanged in a higher number of deals of 20,846 compared with 1.624bn shares valued at N14.421bn exchanged in 19,570 deals recorded in the previous trading week.

The Financial services sector maintains the lead in terms trades by volume, propelled by insurance stocks (LASACO deal inclusive) - dominating trades in excess of 80 percent of total volume of trades this week.  

Market Outlook

As we enter the inauguration week, we still expect momentum to build up as market fundamentals improve with the harmonized CRR at 31percent and activities on banking stocks increase equally as investors analyze the indirect or direct effect on banking performance go forward. We are also expecting that the in-coming government will give a clear direction with regards to its reforms policies, just as announcement of key ministerial appointments would further point the shape of things to come, while ironing out pressing issues to rebuild the economy. We advise investors and traders to trade with cautious, andalso focus on stocks that are trading at discount.

Stocks To Watch

Access Bank, FBNH, Dangote Cement, CCNN, Africa Prudential, United capital, Livestock feed and Oando.

Stock Selection guide

S/N	Company Name	Vol Score	Beta score	EPS Score	Volume weight	Beta Weight	EPS Weight	Total Score
1	FBN Holdings PLC	10	7	6	50	21	12	83
2	United Bank for Africa PLC	9	9	5	45	27	10	82
3	Access Bank Plc	10	7	5	50	21	10	81
4	Guaranty Trust Bank PLC	9	7	7	45	21	14	80
5	Zenith Bank PLC	9	7	7	45	21	14	80
6	Diamond Bank PLC	8	9	5	40	27	10	77
7	Transnational Corporation of Nigeria PLC	10	6	3	50	18	6	74
8	FCMB Group PLC	8	9	3	40	27	6	73
9	Union Bank of Nigeria PLC	8	8	3	40	24	6	70
10	Ashaka Cem PLC	6	8	6	30	24	12	66
11	Skye Bank Plc	7	7	4	35	21	8	64
12	Fidelity Bank Plc	7	8	2	35	24	4	63
13	Dangote Cement Plc	5	7	8	25	21	16	62
14	Lafarge Africa PLC	5	7	8	25	21	16	62
15	Nestle Nigeria PLC	4	7	10	20	21	20	61
16	Oando PLC	7	8	1	35	24	2	61
17	Sterling Bank Plc	6	9	2	30	27	4	61
18	Nigerian Breweries Plc	5	6	8	25	18	16	59
19	Mansard Insurance PLC	6	8	2	30	24	4	58
20	Wema Bank Plc	6	8	2	30	24	4	58
21	Cement Company of Northern Nigeria PLC	4	9	5	20	27	10	57
22	National Salt Co Nig PLC	5	8	4	25	24	8	57
23	Uac Of Nigeria PLC	5	6	7	25	18	14	57
24	Cadbury Nigeria PLC	3	9	7	15	27	14	56
25	Flour Mills of Nigeria PLC	5	7	5	25	21	10	56
26	Unity Bank Plc	5	7	5	25	21	10	56
27	Custodian and Allied PLC	5	8	3	25	24	6	55
28	Julius Berger Nigeria Plc	3	8	8	15	24	16	55
29	Stanbic IBTC Bank PLC	5	6	6	25	18	12	55
30	Forte Oil PLC	3	9	6	15	27	12	54
31	Cutix PLC	3	6	10	15	18	20	53
32	Eterna Plc	4	9	3	20	27	6	53
33	Wapic Insurance PLC	6	7	1	30	21	2	53
34	Continental Reinsurance PLC	6	6	2	30	18	4	52
35	Dangote Sugar Refinery PLC	5	7	3	25	21	6	52
36	Unilever Nigeria PLC	5	7	3	25	21	6	52
37	AIICO Insurance PLC	5	8	1	25	24	2	51
38	PZ Cussons Nigeria Plc	5	6	4	25	18	8	51
39	Conoil PLC	3	7	7	15	21	14	50
40	N E M Insurance Plc	5	7	2	25	21	4	50
41	Dangote Flour Mills PLC	4	9	1	20	27	2	49
42	Guinness Nigeria PLC	3	6	8	15	18	16	49
43	Honeywell Flour Mills Plc	4	8	2	20	24	4	48
44	Livestock Feeds PLC	4	8	2	20	24	4	48
45	International Breweries PLC	4	7	3	20	21	6	47
46	Japaul Oil & Maritime Services Plc	5	6	2	25	18	4	47
47	Red Star Express PLC	4	7	3	20	21	6	47
48	Airline Services and Logistics PLC	3	9	2	15	27	4	46
49	Evans Medical PLC	3	9	2	15	27	4	46
50	ABC Transport PLC	4	7	2	20	21	4	45