Nigerian stocks hit 3-1/2 month low as investors sold off shares

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A board showing stocks displayed on the wall at the Nigerian Stock Exchange in Lagos, February 13, 2015.    REUTERS/Joe Penney
A board showing stocks displayed on the wall at the Nigerian Stock Exchange in Lagos, February 13, 2015. REUTERS/Joe Penney

Nigerian shares fell for the 11th straight day on Wednesday to hit a 3-1/2 low as investors sold off shares in relatively liquid banking and consumer goods stocks.

The bourse, which has the second-biggest weighting after Kuwait on the MSCI frontier market index, shed 1.28 percent to drop below the psychologically important level of 31,000 points on Wednesday.

Analysis

The outlook in the last four trading sessions revealed increased presence of short-termist on the bourse with overwhelming profiteering tendency while the bargain initiative appeared succumbed to retracement pressure that may persist as market sets for price correction.

Furthermore, analysis revealed incoming price correction trend as bargain tendency is growing weaker along with feeble breadth while the key benchmark indices could not hold its support level above 25,800 basis points to close weaker at 25,774.53 basis points.

Mid-week analysis revealed increased risk appetite as investors continued to concentrate more on the small and medium CAP stocks so far in the week while the big CAP stocks experienced weight shedding due to impressive price appreciation recorded recently.

More so, market volume turnover shed weight considerably with corresponding decline in naira votes, signifying weak bargain appetite as against growing bargain appetite noted previously.

In our opinion as revealed by extensive analysis, moderate price correction is likely to besiege market, considering the weak bargain drive displayed so far in the week amid prolonged overbought posture.

At the end of the today’s session, technical analysis revealed weak bargain posture, with feeble breadth and improved risk appetite so far in the week.

Market closed with -0.38% loss as WTD performance – declined optimism was observed when compared with previous mid-week performance of +1.20% gain while YTD performance stands at 24.33% as against 23.69% recorded in the previous mid-week.

The weak bargain drive witnessed towards big CAP stocks in Healthcare, Agriculture, Constructions, Consumer Goods, Finance, Industrial Goods and Oil & gas sectors contributed to the market outlook so far in the week.

The Stocks on the Hunters’ Radar

Investors’ Trading pattern and psychology:

The trading pattern suggests weak bargain tendency while the profile of top 10 stocks on the investors’ radar reveals speculative and increased risk appetite as majority of the stocks that made top ten on the investors’ radar are penny and small CAP stocks.

Analysis of investors’ radar (gainers’ list) revealed grwoing speculative trading due to improved bargain drive towards low priced and small CAP stocks while big CAP stocks shed weight due to profiteering.

 

 

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