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The Market Today - 23 June 2017

NSE set to review sectoral indices
In a release posted on its website on June 21, the Nigerian Stock Exchange (NSE) stated that it is set to commence the bi-annual review of the NSE 30 and six sectoral indices, namely; Lotus Islamic index, Consumer Goods Index, Banking Index, Insurance Index, Oil & Gas index and Industrials index. The review will effectively add some stocks to the indices, as well as remove some with effect from July 1. According to the NSE, the stocks to be added are selected based on their market capitalization from the most liquid sectors. Also, the liquidity is based on the number of times the stock is traded during the preceding two quarters. To be included, the stock must have traded for at least 70 percent of the number of times the market opened for business. The likely entrants into the NSE 30 index are FIDELITYBK, STERLNBANK, DIAMONDBNK, CADBURY and FCMB while those likely to exit are CONOIL, UACN, JBERGER, 7UP and OKOMUOIL. Also worthy of note is the likely additions of SKYEBANK and UNITYBANK to the Banking Sector index and removal of HONYFLOUR and DANGFLOUR from the Consumer Goods index. We believe these stocks would see increased activity in coming sessions as investors position ahead of potential adjustments by various funds which track these indices.

ASI down 164bps as profit taking persists
Continuing its downtrend, the NSE ASI dipped 164bps amidst persistent profit taking and as sustained decline in global oil prices dampened sentiment. Given the significantly weak market breadth as well asthe number of stocks on full offer at the end of the session,we expect another negative close today, even as profit takers maintain a strong grip.

Stock Watch: Following the release of its FY’16 and Q1’17 results which showed notable growth in PAT and a FY’16 dividend announcement of N3.10 per share, CONOIL has gained 17% in three consecutive sessions. The stock currently trades at ₦44.56 and has returned 19% ytd.

Demand surfaces in bond market following monthly auction
The T-bills market sustained bearish trading yesterday despite the liquidity boost and Wednesday PMA stop rates coming in line with market expectations. Meanwhile, following the lower than anticipated stop rates at Wednesday’s bond auction, buying interest re-surfaced in the bond market with yields moderating on the auction maturities. Whilst we expect further demand in the bond market as players who missed out at the auction continue to fill their quotas at the secondary market, we expect demand to remain slightly muffled in the T-bills space.