Expect Mixed Performance, As Investors Await More 2018 Earnings Reports

Expect Mixed Performance, As Investors Await More 2018 Earnings Reports


Post Views: 237 Market Update for March 21 Thursday’s trading activities on the Nigerian Stock Exchange (NSE) was again very volatile and mixed, closi...

Expect Mixed Market, As Portfolio Restructuring, Sell Pressure On High Caps Persist
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Market Update for March 21
Thursday’s trading activities on the Nigerian Stock Exchange (NSE) was again very volatile and mixed, closing lower as the composite index extended its sixth consecutive day losing streak on a positive market breadth and low traded volume.
The continued decline was widened due to price adjustments of Seplat Petroleum Development Company and Stanbic IBTC Holdings for dividend declared by the directors, as well as profit booking in banking stocks.
After the trading session Julius Berger 2018 full year earnings report was made available with final dividend of N2.00, showing impressive numbers which the market has not reacted.
The NSE All-Share index gapped down at the opening session and was down nearly all day, gapping down in large wedges and eventually closing to the downside. Only in late afternoon did it retrace up marginally.
It is however noteworthy that the index touched intraday high of 31,077.89 basis points before breaking down the psychological line of 31,000bps to a low of 30,856.23bps, before finally closing at 30,885.31bps which is the recent low. The market pull backs are consolidating on 5-wave decline extension at the close of the day trade.
Thursday’s market technicals were negative and mixed as volume traded was higher than previous day’s in the midst of positive breadth and high selling pressure, as revealed by Investdata’s Daily Sentiment Report, showing sell position of 87% and buy volume at 13% on total daily transaction volume index at 0.74.
Forces behind the day’s market performance were weak, even if slightly better than the previous session, despite the down market as shown by money flow index at 24.24 points, up from previous day’s 23.55bps, indicating some buying interest in low cap stocks and the rate of funds exiting slowing down.

Index and Market Cap
At the close of the day’s session with the NSEASI shed 115.53bps to close at 30,885.31bps, from an opening figure of 31,040.84bps, representing 0.50% decline; while market capitalization lost N58bn, closing at N11.52tr from its opening value of N11.58tr, also representing a 0.50% further depreciation in value.
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The day downturn was impacted by price adjustment and profit taking in medium and high cap stocks like Dangote Cement, Seplat, Guaranty Trust Bank, FCMB, Zenith Bank, Ucap, and Fidelity Bank. This impacted negatively on Year-to-Date loss, which climbed to 1.73%, while market capitalization loss increased to N143.27 billion from the year’s opening level of N11.72tr, representing a 1.73% decline in value

Mixed Sector Indices
The sectoral performance indexes were largely bullish, except for the NSE Banking and Oil/Gas that were in red due to profit taking in FCMB, Zenith Bank, Fidelity Bank and GTBank, while others were up due bargain hunting in CCNN, Dangote Sugar, Aiico and NASCON even as market breadth turned positive with advancers outnumbering decliners in the ratio of 24:15.
Market activities were up in volume and value by 17.51% and 18.08% respectively to 250.03 million shares worth N2.43bn, compared to the previous day’s 223.66 million units valued at N2.16bn. Volume was driven by financial services stocks like: Access Bank, Zenith Bank, UBA, FBNH and Fidelity Bank.
Sovereign Trust Insurance and Ikeja Hotels, were the best performing stocks, as they topped the advancers table with gain of 10% and 9.62% respectively to close at N0.22 and N1.71 per share on market forces. On the flipside, Campion Brewery and ABC Transport lost 9.68%% and 9.26% respectively, closing at N1.40 and N0.49 each, impact of weak earnings and profit taking.

Market Outlook
Being last trading of the bearish week, expect mixed performance, but as the month of March draws gradually to a close, more 2018 full year earnings reports are expected, just as quarter-end portfolio repositioning ahead of next week’s Monetary Policy Committee (MPC) meeting now that political spending and implementation of 2018 budget have not pushed up inflation as anticipated. There may be a slowdown in selloffs as investors wait to see the outcome of both meetings, as investors look forward to positive economic statement and policy to give direction. Volatility may however continue, as market players adopt the wait-and-see attitude in the face of repositioning for the ongoing 2019 dividend declaration season and relative post-general elections peace to shape market performance in the interim. We advise cautious trading and investing while positioning in fundamentally sound equities.
Volatility will also continue as investors and fund managers reposition their portfolios, with eyes fixed on earnings reports, but 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 also that investors should 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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CRO|Investdata Consulting Ltd

Tel: 08028164085, 08032055467