Post Views: 192 Market Update for January 8 Nigeria’s equity market closed down for the fifth consecutive session on Tuesday, with financial services ...
Market Update for January 8
Nigeria’s equity market closed down for the fifth consecutive session on Tuesday, with financial services providers leading the decliners on a low traded volume and negative sentiments as more blue chip stocks shed value. The continued decline is coming ahead of major economic and political events like the release of December inflation data by the National Bureau of Statistics (NBS); the first meeting of the Central Bank of Nigeria (CBN) Monetary Policy Committee on January 21 and 22; as well as the February 16 Presidential election. These, added to the 2018 full year earnings reporting season when most companies will reward their shareholders with dividend for keeping faith over the past financial year, are factors already being priced into the various stocks.
Tuesday’s trading started with a little gap to the upside, then a pull back by the mid-morning as it sharply rallied down on a six-wave move into the afternoon when the index finally broke down the psychological line of 30,000 basis points. It tested a new 52 week support level of 29,999.93bps, after touching intraday highs of 30,488.52bps but retraced up marginally in the last few minutes to close the session at 30,036.15 on strong selling pressure.
Opportunities in this unstable market situation is for discerning investors and traders that can take calculated risk and manage their emotion, after the huge losses recorded in the benchmark All-Share index in 2018 with the deteriorated sentiments and the likely outcome of the elections. This is, considering the prevailing market value of stocks on the exchange amidst the expected mild improvement in 2018 full year corporate earnings due to improved economic activity recorded in Q4 of 2018 as a result of the most recent festive period that may swing positive earnings surprises in some sectors and stocks this year.
This is once again the time for investors to buy stocks for future gains despite the gloomy situation in the market now.
Market technicals for the day were negative and weak as traded volume fell lower than previous day’s in the midst of negative breadth and sentiment, as revealed by Investdata’s Daily Sentiment Report, showing a sell position of 93% and 7% buy volume, while the day’s total transactions volume index stood at 0.67.
The energy behind Tuesday’s market performance was down and weak, as reflected in the 31.35bps money flow index, from previous day’s 36.25bps, to indicate that funds are leaving the market as the election comes closer.
Index and Market Cap
The benchmark index NSEASI for the day shed 364.13bps to close at 30,036.15bps, from 30,400.28bps, representing 1.2% decline, just as market capitalization lost N135.79bn, closing at N11.2tr, from the opening value of N11.34tr, representing a 1.20% value loss.
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Tuesday’s downturn was as a result of major selloffs in banking stocks like Guaranty Trust Bank, Zenith Bank, FBN Holding, UBA and Diamond Bank, as well as Flour Mills, Dangote Sugar, Dangote Flour, Oando, and International Brewery. These further deepened Year-to-Date loss to 4.44%, while market capitalization losses increased to N519.97bn, from its opening level of N11.72tr, representing a 4.44% decline.
Bearish Sectors Indices
All sectoral indices remained in the red, except for NSE Industrial that closed higher with 0.58%. Market breadth maintained the negative position, as decliners outweighed advancers in the ratio of 28:12. Market activities were down in volume and value by 2.85% and 20.73% respectively to 216.25m shares worth N2.67bn, from previous day’s 222.58m units valued at N3.34bn. Transaction volume was buoyed by financial services stocks Zenith Bank, FBNH, Transcorp, Guaranty Trust Bank and Diamond Bank.
JohnHolt and Okomu Oil were the best performing stocks as they topped the advancers table, chalking 9.09% and 7.39% respectively to close at N0.48 and N83.75 each, on market forces. On the flipside, NEM Insurance and NNFM led the decliners’ table alsowith 9.40% and 9.38% respectively to close at N2.12 and N4.35 each, on profit taking and market forces.
Technically the market again is at a critical point to move to 28,000 mark as mentioned in our update yesterday as MACD, became bearish on crossing signal line to support the ongoing trend and volatility amidst repositioning for 2018 full year earnings season to shape market performance ahead of the various factors listed above. We advise cautious trading and investing in the days ahead.
The ongoing volatility will persist as Q3 numbers assist investors and fund managers rebalance their portfolios, while watching the political space and ahead of full year company earnings position and post-election market dynamics. These are likely to drive prices north, or south, while determining market direction before or after the Presidential Election.
Investors should review their positions in line with their 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,
We advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain low in the midst of mixed company numbers, weak economic and market fundamentals.
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