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The bear’s knife
cut deeply into listed equities during the first few days trading this
week. All Share Index of the Nigerian Stock Exchange nose-dived
within the first three trading days and only managed a slight
appreciation by the end of the week. Moving from the opening figure of
25,106.86 points it shed 832.35 points, equivalent to 3.34 percent and
wrapped up at 24,274.51 points. The market capitalization equally
closed below the opening value at N5.936 trillion from N6.14 trillion.

The NSE-30 Index
lost 33.51 points or 3.22% to close the week’s transactions at
1,012.41. The four most active sector’s index closed in the red through
the week. NSE Banking index closed down by 16.69 points same as 4.5 per
cent to end the week at 355.43 points. NSE Food/Beverages lost 27.74
points or 3.33% to close with 782.43 points. NSE Insurance Index closed
at 168.88 points having shed 5.51 points or 3.2% of its opening points.
NSE Oil/Gas was down by 361.47 points or 2.43% closing at 361.47 points.

Technical view

Nigerian Stock
Exchange All Share Index (NSE ASI) currently trends below RSI (Relative
Strength Index) 30 which is a sell/oversold position. The current
pattern is new for the year. The last time the index broke RSI 30 with
full force was August 2009 (then it recovered exactly around RSI 15).
Other periods were March 2009, November and December 2008. In all these
periods, the NSE ASI has always recovered on a common point of RSI-13+.
On the third trading day of the week, the index hit RSI 15 and
recovered the next day. The recovery attempt seen on Thursday and
Friday was due mainly to the support point; therefore NSE ASI will
require some fundamental bases to sustain the recovery otherwise it may
not last.

NSE ASI chart performance for the week

Investors traded
1.2 billion units of shares on all equities within the week. The said
volume was valued at N110.40 billion and was moved by 32,155
transactions. As in previous weeks, the banking sector dominated market
activities with the 725.80 million units of shares it traded in 16,779
deals. The said volume accounted for 60.41% of the total volume traded
on all equities through the week. United Bank for Africa, First Bank of
Nigeria Plc, Union Bank of Nigeria Plc and Guaranty Trust Bank were the
most active in the sector. Meanwhile, volume traded on the shares of
AIICO Insurance Plc and Continental reinsurance Plc boosted performance
in the Insurance sector; investors exchanged 79.03 million units of
shares valued at N85.31 million in 1,396 deals through the week.

Gainers and losers for the week

As investors start
showing keen interest in African Petroleum shares due to their
attractive prices, the price moved up by 27.45% from the opening price
of N21.20 to N27.02. First Aluminum recorded 23.81% price appreciation
to close at N0.78 from N0.63. Vono products, Longman and Evans medical
followed in that order with 15.38%, 10.08% and 7.5% respectively.
Meanwhile, Intercontinental bank reduced in price by 15.14% and close
in the black at N1.57. Oceanic Bank lost 14.11% to and Wema Bank Plc,
Bank PHB and AIICO shed 13.83%, 13.14%, 11.97% of their respective
opening figures respectively.

Over-the-counter bond market

Measured in
volume, a turnover of 260.9 million units of bonds valued at N256.173
billion and crossed in 2,602 deals were executed last week, in contrast
to a total of N239.15 million units worth N243.862 billion exchanged in
2,890 deals in a forth night ago. As recorded in the preceded week, the
10% FGN July 2030 bond with recorded volume of 97.63 million units
valued at N88.827 billion in 1,022 deals was the most active traded. It
was followed by 4% FGN April 2015 series with a traded volume of 34.6
million units valued at N28.383 billion in 247 deals. Fifteen (15) of
the available thirty thirty-seven (37) FGN Bonds were traded in the
concluded week, compared with eighteen (18) in the preceded week.

Corporate actions

First quarter (Q1)
reports of National salt & co. plc in the current fiscal year
(2010) showed weakened performance. Head line indicators plunged by
double digits as shown in the table below; Turnover (TO) -13.7% and
profit after tax (PAT) -19.5%. As a result of dip in bottom line, Q1
EPS shed 23.1% from Q1 ‘09 of 13k at current 10k. PE ratio of 76x shows
that NASCON return period is in the long term. On every N1 sales,
computed figure revealed a returned on profit of 15 kobo.

Observation; On the
ground of this Q1 results, NASCON appears weak on capital growth
considering PE ratio of 76x. Market awaits the over due Q2 results to
accentuate investment position.

Access bank plc

The Q2 reports of
Access Bank for the period ended June 2010 revealed modest recovery
from the red. Recall that the company plunged into negative figures
after the provisioning for toxic loans in Q2 2009. Sales revenue dipped
by 19.5% at N49.41 billion. Conversely, PAT recorded significant triple
digits growth at +155.8%. Q2 EPS now stands at 37 kobo against negative
value in Q2 ‘09. PE ratio of 22.7x appears attractive for long term
investment.

Incentive &
Observation; An interim dividend of 20 kobo per share has been
recommended by Access’s directors for shareholders’ benefit. Closure
date is scheduled on September 3, 2010.

The current price of Access is high and this reduces possibility for capital appreciation in the short term.

Benue cement company plc

Both Q1 and Q2
reports of BCC Plc for period ended March and June 2010 were
simultaneously released last week. Indicators revealed slide
performance against Q1 and Q2 ‘09. Feelers in the market adduced this
to product/segment competitiveness. As shown in the below table, TO and
PAT headed south. The earnings potency of BCC dipped by 16% at (Q1 EPS
of 115k), and 2.8% at (Q2 EPS of 283k).

Observation; At market price of N62.50 against Q2 PE ratio of 26x, BCC is high and not a suitable short term investment.

Market outlook

Although the market
is currently attempting a recovery, it may not last owing to the fact
that the two days’ appreciation cannot even account for the loss
experienced in one day (Wednesday). ASI currently trades below 90 Days
Moving average. This is a sell, the implication is that most entry made
may hold investors longer than expected nevertheless, most equities are
currently selling below their intrinsic values and are therefore very
attractive. Investors should adopt the investment strategies of
positioning towards the bull’s arrival.