Equities market bows to profit-taking pressure at -3.35%

The Nigerian equities market recorded loss by 3.35 per cent after five consecutive weeks of bullish streak with declines across sector indices. The market started last week negative, extending the negative close in the penultimate week which ended a seven-day bullish spree, and extended till Wednesday, as investors took profit on previous gains recorded in the market.

However, on Thursday, the negative performance was bucked, owing to gains of Dangote Cement stocks, following news of a regulatory approval of the sale of N200 billion worth of shares in the company by Dangote Industries Limited.

On Friday, the bullish  pull was extended with a cumulative gain of 2.26 per cent, as investors hunted bargain in value stocks in the Industrial, Banking and Insurance indices.

Overall, the All Share Index lost 3.35 per cent during the seven-day trade settling at 36,920.56 points, as Year-to-Date returns records 37.38 per cent.

Performance across sectors was broadly bearish, led by the Industrial Goods indices at +6.02 per cent and Consumer Goods, at +2.76 per cent, as investors took profit in the shares of CCNN, WAPCO, Dangote Cement, Guinness, Cadbury, and Dangote Sugar.

According to analyses, players in the downstream oil and gas sector have recorded significant contraction in gross margins, following the rising landing cost of PMS and the intervention by the NNPC in bringing down the price of AGO across its depots, thus, investor interest in the oil & gas sector has been downbeat with sell-offs across most counters during the week, with the most notable being Total at 8.39 per cent, Forte Oil  at -7.41 per cent, Eterna at -6.01per cent and Oando at 5.94 per cent.

Market breadth during the week under review weakened to close negative, with 19 gainers topped by Fidson, and 48 losers CCNN. Total volume traded also declined further by 8.13 per cent to 1.39 billion shares, with Access, Zenith and Guaranty Trust banks accounting for 47.0 per cent of the market volume, while value of trades also plunged by 13.27 per cent to N25.04 billion.

Given the gains recorded towards the end of the week, analysts at Cordros believe interest in the equities market remained robust as the year second half earnings performance speaks to positive expectation for Q3-17 earnings. “We believe the market is near the overbought region and some corrections eminent given the significant gains recorded for five consecutive weeks. However, fundamental drivers of investors’ interest in key counters reflect a divergence from the levels in the previous years, revealing the likelihood of the settlement of a new resistance level for the market. Overall, we expect a mixed performance, with modest gains in the weeks ahead.