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Bearish sentiment to persist as profit taking ensues

By Nkiruka Nnorom

HAVING closed the week on a downward note, investment analysts have said that the equities market will continue in the same mode this week due to lack of positive information to spur another bullish run.

The market has been on roller costa with the year-to-date return moving to over 42.14 per cent per cent as at the close of transaction two weeks go driven by improvement in macro-economic environment, introduction of Investors & Exporters (I&E) forex window and release of better-than-expected half year financial results by many of the quoted firms.

However, due to the limited information flow and profit taking on over weighted stocks, the market relapsed to negative territory, with the equities capitalisation dropping by N120.4 billion to N12.726 trillion at week close, representing 3.35 per cent decline.

In the same vein, the All Share Index, ASI, depreciated by 3.35 per cent to 36,920.56 points from 37,425.15 points, with the year-to-date return slipping to 37.38 per cent at the close of trading on Friday, August 18, 2017.

Also, all the sectorial indices took a downward trend led by industrial goods sector by 6.02 per cent to close at 2,176.06 points, followed by the consumer goods sector which fell by 2.71 per cent to close at 952.24 points and the oil and gas sector which dipped by 2.31 per cent to close at 309.54 points.

The insurance sector was down 1.01 per cent to close at 137.52 points, while the banking sector fell marginally by 0.45 per cent to close at 448.95 points.
There were 57 losers during the week compared to 19 that recorded price increment. Cement Company of Northern Nigeria, CCNN, led the losers during the week, dropping by 13.91 per cent to close at N9.22. This was followed by NEM Insurance, which went down by 12.73 per cent to close at N0.96, while Jaiz Bank, Total Nigeria Plc and Morison Industries Plc all went down by 9.52 per cent, 8.39 per cent and 8.16 per cent to close at N0.76, N228.11 and N0.90 respectively.

On the contrary, Fidson Healthcare Plc led the gainers, appreciating by 9.70 per cent to close at N3.28, followed by Continental Reinsurance Plc, which rose by 6.56 per cent to close at N1.50. UPL Plc rose by 6.34 per cent to close at N2.85, while Julius Berger Plc and GlaxoSmithKline Plc added five per cent each to their share prices to close at N7.14 and N21.00 respectively.

However, in its prognosis into the week, analysts at Vetiva Capital Management said: “With buying momentum strengthening at week close, particularly on notable banking names, we foresee a positive start to trading next week”.

In their own projection, analysts at Meristem Securities said: “As expected, the market’s activities during the week were dominated by profit-taking especially on heavily weighted stocks. We attribute the sell pressures to the dearth of significant positive news inflow to spur bullish sentiments. Consequently, we expect the downward trend to persist in the coming week.”


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