Post Views: 168 Market Update for August 7, 2018 The nation’s equity market indices again suffered a setback on Tuesday and extended its three back-to...
Market Update for August 7, 2018
The nation’s equity market indices again suffered a setback on Tuesday and extended its three back-to-back sessions of decline to make lower lows amidst anxiety in the political environment ahead of 2019 elections that continues to propel fear and drain investor confidence as the whole world watches Nigeria with rapt attention.
The drama that played out Tuesday morning with the barricading of the National Assembly complex and an altercation between a legislator and masked secret police officer wielding gun that went viral further thickened the air of uncertainty over 2019, reminiscence of the military era. With this and other drama series happening in Nigerian politics, the end of the ongoing correction may not just be in sight yet, even as the gale of defection continues across the nation, just before the party’s primaries. This situation may continue even after.
This suggests that the already cautious trading pattern will persist as the just concluded earnings season will not make much difference. The financials have only revealed the state of these companies as a guide to help investors as they watch market trend and other events happening locally and international.
Be patient here if you have positioned for the interim dividend.
The day started out with a very long surge to the downside, extending the decline wave that ensued since the last trading session of July, touching intraday lows of 36,321.50 basis points, from highs of 36,491.19 in the afternoon before retracing marginally to finish the session at 36,333.80bps. Nevertheless, the possibility of reversal is slim, despite having a seemingly double bottom formation. Investors should however wait to see, especially with the high likelihood of going further down.
It is obvious that the market situation is not friendly with many stocks, but knowing the right value and growing companies to buy now or after election is very important, the criteria for choosing quality companies with excellent earnings that support price and dividend were discussed at the July 28, 2018 workshop hosted by Investdata Consulting. The home study packs are ready now. For your Study Pack, call or send YES to the phone numbers below.
Tuesday’s market technicals were negative and mixed, as volume traded improved in the midst of positive market breadth and negative sentiments as revealed by Investdata’s Daily Sentiment Report, showing a ‘sell’ position of 93% and ‘buy’ volume at 7%. Volume index was 0.85 of the day’s total transactions.
Energy behind the day’s market performance was weak, regardless of the low liquidity, as reflected in the money flow index at 30.998bps, a decline from previous day’s 31.48points, indicating that funds are exiting the market, even if it is low.
Index and Market Cap
At the end of the trading session, the NSE’s composite index shed 146.62 basis points, closing at 36,333.80bps, after opening at 36,479.42bps, representing a 0.40% decline, while market capitalisation was down by N53.16bn to close at N13.26tr from an opening value of N13.32tr, which represented 0.40% depreciation in value as investors loss position deepen.
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Tuesday’s session downturn was due to losses suffered by premium stocks and others that further drag down the market, which impacted negatively on the NSE’s Year-to-Date return, to deepen the negative position to 4.99%, just as market capitalization decline within the period stood at N347.55bn, and 2.55% below the year’s opening value.
Bearish Sector Performance
Sectorial performance on Tuesday were bearish, except for the NSE Consumer Goods that closed higher with 0.63%. Market breadth was flat as the number of advancers outnumbered decliners in the ratio of 22:21, to continue the three day bear run.
Market activities were up in volume and value by 36.07% and 10.43% respectively to 243.87m worth N2.22bn, as against the previous day’s 182.29m units valued at N2.03bn.
Transactions for the day were boosted by trading in financial services stocks: Wema Bank, GTBank, UBA, Diamond Bank and Ucap that witnessed increased trading to top the activity chart.
The best performing stocks for the day, were Livestock Feeds and Ucap that topped the advancers’ table, after gaining 10% each, to close at N0.66 and N3.08 respectively due to market forces and sentiments for low priced stocks.
On the flip side, Cap and Mutual Benefits were the worst, losing 10% and 8.82% respectively to close at N28.35 and N0.31 on profit taking and market forces.
We expect the pullback to continue ahead of Q2 GDP report that will hit the market any moment as the whole world watch Nigerian politicians toiling with the future of this great nation.
Meanwhile, investors continue to interpret the recent Q2 earnings reports so as to rebalance their portfolios and watch the political space and analyse at the actual coming numbers released so far as a basis for determining the market and economy’s direction going forward. More disappointing reports will drive the market further down, or inspire a reversal if the numbers beat expectation.
Also important, is the outcome of the shadow elections by political parties taking place in the month of August. Investors should review their positions in line with investment goals, strength of the company numbers and act as events unfold in the global and domestic environment.
However, we would like to reiterate our advice that investors should go for equities with intrinsic value, especially during this season were Q2 interim dividend payment are expected in the market arena very soon.
We advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst improving company, economic and market fundamental.
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