Post Views: 407 Market Update for January 7 Monday’s session was another very tough and volatile one on the Nigerian Stock Exchange (NSE), leading to ...
Market Update for January 7
Monday’s session was another very tough and volatile one on the Nigerian Stock Exchange (NSE), leading to the fourth consecutive days of free fall in equity prices, as selloff was evident in almost all sectors, especially against the gathering clouds in the political environment and anxiety over Nigeria’s all-important Presidential election holding next month.
The NSE’s benchmark All-Share index closed lower on a relative low volume, after inching up at the opening session, but dropped sharply by the mid-morning till afternoon, breaking down the last strong support level of 30,542.86 basis points. It made new 52-week lower lows after touching intraday low of 30,260.03bps from the highs of 30,709.65bps, thereby extending the corrective wave six, before retracing up in the last few minutes to close the first trading day of the week at 30,400.28bps.
The market is likely to hit ANOTER new support level of 28,855.02bps before the elections proper. In the process, it would create more buying opportunities for discerning investors to take advantage of the prevailing situation and position for dividend and capital appreciation ahead of the forthcoming earnings reporting season.
The NSE in the last four trading sessions has ignored the rebounding oil price at the international market as it closed Monday at $58.37 per barrel (still below the Federal Government’s $60pb benchmark used for the 2019 budget), besides other seemingly positive macro-economic indices recently released.
Monday’s market technicals were negative and mixed as traded volume was lower than previous day’s in the midst of negative breadth and sentiment, as revealed by Investdata’s Daily Sentiment Report, showing a sell volume of 69% and 31% buy position. Volume index for the day’s total transactions was 0.66, while momentum behind the market’s performance was marginally down, as reflected in the 36.25bps money flow index, from previous day’s 36.93bps, despite the down market and low traded volume which indicates that funds are leaving some stocks for others.
Index and Market Cap
The NSE All Share Index at the end Monday’s session lost 238.62bps to close at 30,400.28bps, from 30,658.90bps, representing 0.78% decline, just as market capitalization shed N88.93bn, closing at N11.34tr, from the opening value of N11.43tr, representing a 0.78% value loss.
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The downturn was due to profit taking and selloffs in stocks like Nestle, Okomu Oil Zenith Bank, FBN Holding, Flour Mills, Dangote Sugar, FCMB, Access Bank and UACN, among others, which left Year-to-Date loss at 3.28%, while market capitalization decline increased to N384.18bn, from its opening level of N11.72tr, representing a 3.28% decline.
Bearish Sectors Indices
All sectoral indices on Monday were mostly bearish. Market breadth remained negative, with decliners outnumbering advancers in the ratio of 34:14, just as market activities were mixed with volume down by 33.42% to 222.58m shares from the previous day position 334.32m units. Value however rose 88.73% to N3.34bn from Friday’s N1.77bn, as transaction was driven by financial services stocks: Diamond Bank, Zenith Bank, FBNH, Guaranty Trust Bank and Access Bank.
Diamond Bank and Wapic Insurance were the best performing stocks, as they topped the advancers table, chalking 10% apiece and closing at N1.98 and N0.44 each, on market forces. On the flipside, NEM Insurance and Resort Savings Loan Plc led the decliners’ table also with 10% each to close at N2.34 and N0.45 each, on market forces and trend.
Technical tools remain negative with MACD, forming a double top on a daily time frame, while crossing down supports in the ongoing trendy and volatility amidst repositioning for 2018 full year earnings season to shape market performance ahead of December inflation data. There are also factors such as the Monetary Policy Committee (MPC) meeting holding this month, February’s Presidential election, earnings season beginning from February also and then the May 29 handover date. 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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