Post Views: 318 Market Update for February 12 Tuesday’s trading session on the Nigerian Stock Exchange (NSE) had a solid up-day to extend its eight co...
Market Update for February 12
Tuesday’s trading session on the Nigerian Stock Exchange (NSE) had a solid up-day to extend its eight consecutive days of bull dominance to close positive with the highest gain so far in 2019, driven by factors such as the increasing demand for stocks, impressive 2018Q4 and full-year GDP data released by the National Bureau of Statistics (NBS). The data revealed economic expansion and growth following which 2018 full year GDP stood at 1.93%, helped by growth in the non-oil sector (READ MORE). Already, buoyed by the improved numbers, the Federal Government says the economy is likely to grow by an even more robust 3% in 2019 (READ).
Also, the improving liquidity in the market is an indication that foreign investors are already looking the way of emerging markets like Nigeria as U.S rates normalization in the interim is likely to slow down, going into the year. This increased liquidity is reflecting in the NSE’s money flow index as more funds flow into the market as revealed by the reading of 72.95 which is high.
Trading for the day started out on a gapped up in the morning session which ran all day in 5-wave advances, despite the pullback at midday due to profit taking in some major banking stocks, after which it rebounded heavily in the afternoon to close the session higher at 32,462,31 basis points, its day-high, on a positive breadth and sentiment. During the session, the market touched a low of 31,783.00bps on a huge traded volume.
Tuesday’s market technicals were positive and strong, as volume traded was huge and higher than previous session in the midst of a strong breadth and high buying pressure as revealed by Investdata’s Daily Sentiment Report, showing 100% buy position. The day’s transaction volume index stood at 1.83.
Energy behind the day’s market performance was up, as shown by the earlier mentioned money flow index, from previous day’s 71.70bps, an indication that funds are entering the market and some stocks, despite the political risk associated with presidential polls coming up in less than 72 hours.
Index and Market Cap
At the end of trading session, the NSE’s benchmark All Share index gained 680.44bps, having opened at 31,781.87bps, representing a 2.14% gain; while market capitalization rose by N253.74bn at N12.11tr, from the opening value of N11.85tr. This represented a 2.14% appreciation in value as highly capitalized stocks rallied for the day.
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The continued upturn was attributed increasing bargain hunting on low, medium and high cap stocks like: Dangote Cement, Seplat, NB, Nestle, Guaranty Trust Bank, Flourmills, 11 Plc, Zenith Bank, FBNH, UBA, Access Bank, Dangote Flour and Dangote Sugar, among others. This propelled Year-to-Date gain to 3.28%, while market capitalization gained N385bn from the year’s opening level of N11.72tr, also representing a 3.28% growth.
Mixed Sectors Indices
Performances of the sectoral indexes were largely bullish, except for NSE Insurance that closed red, due to profit booking on stocks like NEM, Aiico and others, while the NSE Oil/Gas sector led with 4.44% on gains by Seplat and 11 Plc. Market breadth remained positive with advancers outnumbering decliners in the ratio of 38:14.
Market activities were up in volume and value by 5.23% and 42.79% respectively to 580.41m shares worth N5.56bn, from previous day’s 551.59m units valued at N8.03bn. Transaction volume was largely driven by financial services and conglomerates stocks like: Diamond Bank, Zenith Bank, Guaranty Trust Bank, Transcorp and Access Bank.
Dangote Flour Mills and NPF Microfinance Bank were the best performing stocks for the day, topping the advancers table with 10% each to close at N8.25 and N1.65 respectively on expectation of Q4 earnings reports and high dividend yield respectively. The flipside was led by Regency Insurance and UACN Property, shedding 8% and 7.85% respectively to close at N0.23 and N1.76 each, on the back of profit taking.
We expect the ongoing trend and volatility to persist, as investors and traders reposition for 2019 dividend declaration season and post-election rally which are expected to shape market performance in the interim. We advise cautious trading and investing while positioning in fundamentally sound equities. As early filers like Ucap, Africa Prudential, NB, Forte Oil and other are expected to hit the market with their numbers any moment from now.
Volatility will also continue as investors and fund managers reposition their portfolios, with eyes fixed on political space and ahead of January inflation data, which is another factor 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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