The equities market experienced a bullish momentum for the week as the market gained for three out of five trading days, thereby reversing the bearish trend of the past four weeks. The NSE All Share Index surged remarkably by 0.93 percent Week-on-Week (W-o-W) to peg YtD (Year-to-Date) return at -1.56 percent.
Volume and value traded inched up respectively by 23.16 percent and 7.11 percent (vs. 101.5% and 232.54% in the previous week). Market breadth for the week settled at 0.53x in favour of decliners (52 stocks) against the advancers (33).
IKEJAHOTEL yet again led the gainers’ chart with a Week-on-Week (W-o-W) return of 51.41 percent. VONO also remained consistent for the third week with 37.14 percent gain while PREMBREW, RTBRISCOE and CHAMPION gained 21.33 percent, 8.99 percent and 8.56 percent, respectively.
ROADS rocked the bottom shedding points by 25.65 percent WoW, closely convoyed by AGLEVENT with 13.16 percent loss, while ROYALEX, FTNCOCOA and CONOIL shed 12.07 percent, 10.53 percent and 9.73 percent in that order.
We expect the market to maintain the positive mood as the outcomes of the MPC and FOMC meeting have maintained stability along all monetary policy variables.
Banking Sector: Trends south as 10 stocks trade negative
Contrasting the activities of last week, the banking sector closed in the red as 10 stocks traded negative, three stocks traded positive, while UNITYBNK and ACCESS traded flat. STANBIC, WEMABANK, and ZENITHBANK gained 2.07 percent, 1.11 percent and 0.20 percent, respectively, while losers were SKYEBANK, STERLNBANK, UBN, UBA, FIDELITYBK, FBNH, ETI, DIAMONDBNK, FCMB, and GUARANTY, dipping 7.99 percent, 5.65 percent, 5.55 percent, 3.20 percent, 2.50 percent, 2.07 percent, 1.66 percent, 1.59 percent, 0.96 percent, and 0.69 percent in that order.
The self-initiated technical suspension of Access Bank met varying opinions in the market, as the bank requested this from the NSE to prevent the erosion of value of its share price due to its plans to raise N68 billion via a rights issue. The technical suspension which will last till January 27, 2015, will leave the share price of the stock at its current price level of N9.59 irrespective of trades during the period.
The September MPC meeting, which concluded last Friday, saw key rates left unchanged. This leaves the position of banks unchanged, and gives them room to continually improve upon their income generation techniques despite regulatory headwinds, which has been seen thus far this year.
The negative returns of the sector however justifies our opinion on the winding up of the rallies that met stocks such as ETI and UBN for most of the week’s past, and we expect positive trading next week, owing to the pronouncement in the just concluded MPC meeting.
Industrial Goods Sector: DANGCEM pushes sector into positive zone
The industrial goods sector reversed last week’s negative mood this week, gaining 4.29 percent as measured by our Meri-Ind index. Four stocks recorded positive performance while two counters declined in the week.
PORTPAINT shrugged off sell sentiments from the previous week having gained 1.68 percent week-on-week to close share price at N5.08. WAPCO, CUTIX and DANGCEM closed higher in the week after gaining 7.59 percent, 5.49 percent and 4.14 percent, respectively.
CCNN, which previously benefited from a recent price rally on the heels of a good half year earnings results, appears to be experiencing gradual profit taking as the stock shed 0.34 percent during the week’s trading with price settling at N14.45. CAP and ASHAKACEM also closed down following price declines of 1.02 percent and 0.65 percent, accordingly.
Given the general bearish mood in the market as well as past rallies on major sector counter, save for DANGCEM and CAP, we envisage a lacklustre sector performance in the coming weeks. We however acknowledge the possibility of improved sector returns driven by the growing positive sentiments on DANGCEM following the recent $300 million investment on the company’s shares and continued propensity to expand its frontiers.
Consumer Good Sector… sector sentiments receive a boost
The consumer goods basket seems to be on a gradual shift to the positives given the level of gains recorded relative to previous week’s trading. Some sector heavyweights recorded sizeable gains though general sell sentiment is still noticeable.
VONO and PREMBREW sustained the positive momentum of the prior weeks as they returned +37.14 percent and +21.33 percent in the week. NESTLE,PZ, UNILEVER, GUINNESS,NB and INTBREW all appreciated by 3.96 percent, 0.24 percent, 4.14 percent, 1.75 percent, 1.02 percent and 2.62 percent, respectively. 7UP remained stable at N134 for the third consecutive week after few days of positive gains. NNFM also traded flat WoW, remaining at N21.99.
DANGSUGAR led the sector’s decliners for the week after posting -7.95 percent return followed by LIVESTOCK, which lost 5.50 percent WoW. CADBURY, DANGFLOUR, HONYFLOUR, FLOURMILL, NASCON, and VITAFOAM also depreciated by 4.56 percent, 1.15 percent, 0.49 percent, 2.66 percent, 4.78 percent and 1.40 percent, respectively.
On the whole, the sector closed the week on a positive note after posting +2.65 percent return. While a breather seems to be visible in the general market sentiments, we expect the sector to continue to benefit from positive market sentiments.
The conglomerate sector had a negative week with both UACN and AGLEVENT losing 1.72 percent and 13.16 percent WoW, respectively.
Oil and Gas Sector: Negative sentiment drags industry return
The oil and gas sector experienced tempered investors’ confidence during the week as the sector index lost in all the five trading days. The meristem oil and gas index lost 4.12 percent for the week even as all the counters in the sector closed either negative or flat.
CONOIL continues its losing streak during the week as it topped the sector’s losers’ chart for the second consecutive week. CONOIL sheds 9.73 percent to close at N47.99. FO, OANDO, SEPLAT, TOTAL, MOBIL and ETERNA, were the other decliners during the week losing 4.97 percent, 4.80 percent, 4.48 percent, 4.16 percent, 3.33 percent and 1.55 percent, respectively, while MRS closed flat.
Our valuation puts CONOIL at the fairly priced region alongside TOTAL based on their current prices. We maintain our overpriced position on MRS and MOBIL, while ETERNA remains slightly undervalued.
Insurance Sector: Sustains positive momentum
The insurance sector consolidated on the marginal gain it recorded in the previous week as the sector advanced by 1.29 percent. The large chunk of the positive performance was contributed by NEM, which recorded price appreciation of 6.58 percent following a significant sell-off that trimmed its price by 5 percent in the preceding week.
The sector’s most capitalised stock (MANSARD) also returned 3.20 percent to close at N2.58 in the week. Other performers for the week were AIICO and MBENEFIT, which prices extended by 2.41 percent and 1.89 percent.
The industry’s laggards for the week was led by ROYALEX as profit taking depreciated its price significantly by 12.07 percent following position taking that trailed its financial scorecards (2013FY,Q1:2014 and Q2:2014). Other counters that dragged the sector for the week were INTENEGINS, WAPIC and CONTINSURE with price drops of 1.89 percent, 1.37 percent, and 1.02 percent in that order.
UNITYKAPITAL notified the NSE that the board members will convey an emergency board meeting on Monday, September 22, 2014. Subsequently, we expect the company to release its 2013FY result. On the back of the company’s fantastic performance as at Q3:2013, we have positive outlook for the company’s result all else equal.
Healthcare Sector: Negative sentiment persists
The health sector measured by the MERI-HEALTH index, continued its negative trend in the week, shedding 0.01 percent to peg the YtD at 448 percent.
Despite the modest activities in the week, FIDSON and MAYBAKER swung slightly within the positive terrain gaining 5.39 percent and 1.45 percent, respectively, to close the week at N3.37 and 1.40 in that order. NEIMETH and NIGERIA-GERMAN were the only counters that shed prices, losing 0.93 percent and 4.89 percent, respectively. Other counters in the sector recorded no price movements in the week.
The activities of speculators have dictated the stride for the sector, as they take advantage of the low prices and cash out at any slight gain. Although the current performance of the counters seems unattractive, we are very optimistic about the future and opportunities inherent in the sector, and we believe that some players are already on their way to tapping into some of them.
Services Sector: IKEJAHOTEL… at the centrestage
The services sector continues it bullish trend, courtesy of IKEJAHOTEL, which returned 51.41 percent in the week. The sectoral index dipped WoW by 3.04 percent, while the YtD stands at +7.21 percent. IKEJAHOTEL remains a toast to investors among other counters in the sector as the price continues to swing upward, price closed at its year high of N2.15.
The sector breadth (0.8x) shows that more sector investors took profit during the week as four stocks appreciated against five that declined. The top gainers for the week were IKEJAHOTEL, RTBRISCOE and REDSTAREX, which returned 51.41 percent, 8.99 percent and 4.38 percent, respectively, while the laggards were ACADEMY, TRANSEXPR and ABCTRANS, which shed 9.03 percent, 4.68 percent and 4.29 percent in that order.
Market sentiment was the major driver for this week’s performance, although we have a short- to medium-term positive outlook for most counters in the sector.