Post Views: 195 Market Update for March 18 Monday’s trading on the Nigerian Stock Exchange (NSE) remained volatile and negative to start the week with...
Market Update for March 18
Monday’s trading on the Nigerian Stock Exchange (NSE) remained volatile and negative to start the week with slight decline, extending three consecutive days of losses on a low traded volume and mixed sentiments. The continued downtrend in the midst of good company fundamentals and low valuation can be linked to liquidity problem in the equity segment of the capital market, even as legal battle is set to begin following the outcome of the February 23 Presidential election by the main opposition Peoples Democratic Party (PDP).
Despite the seeming inflow as revealed through the investors and exporters window, foreign investor’s interest has remained tilted towards high interest yield fixed income instruments, including sovereign bonds. We believe this sustained interest can be linked to several factors, particularly the fact that global monetary authorities have signaled policy direction towards a dovish stance in 2019. This has seen yields in developed market instruments trend lower, especially in US.
The benchmark NSE All-Share index opened marginally upside into mid-morning before pulling back between midday and early afternoon, touching intraday low of 31,103.67 basis points from its highs of 31,156.47bps. It then retraced up, but finished the session lower at 31,125.39bps on a negative breadth. During the session no earnings reports were released.
Market technicals were weak and mixed with volume traded lower than previous day’s in the midst of negative breadth and mixed sentiment, as revealed by Investdata’s Daily Sentiment Report, showing a sell volume of 59% and buy position of 41% on a total daily transaction volume index at 0.59.
Momentum behind the day’s market performance was low and weak to reflect the bearish mood as shown by the money flow index at 21.21 points, down from previous day’s 26.10bps, indicating that funds are leaving the market for safer investment windows.
Index and Market Cap
The NSEASI shed 17.33bps at the end of trading to close at 31.125.39bps, from an opening figure of 31,142.72bps representing 0.06% decline; while market capitalization slowed down N6.46bn, closing at N11.61tr, from its opening value of N11.64tr, also representing a 0.06% value loss.
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Monday’s downturn was driven by selloffs in medium and high cap stocks like Dangote Cement, Zenith, Dangote Sugar, Africa Prudential, as well as May and Baker. Also, the share prices of United Capital and Africa Prudential, among others, were adjusted during the session, impacting negatively on Year-to-Date loss position to 0.97%. Market capitalization loss rose to N499.64bn from the year’s opening level of N11.72tr, representing a 0.97% decline in value
Mixed Sector Indices
Sectoral performance indexes were largely bearish, except for the NSE Consumer Goods and Industrial Goods that closed higher, even as market breadth remained negative, with decliners outpacing advancers in the ratio of 20:11.
Market activities were down in volume and value by 1.86% and 41.16% respectively to 205.73m worth N1.93bn, compared to Friday’s 209.62m units valued at N3.33bn, just as volume was driven by financial services stocks like: Access Bank, Zenith Bank, UBA, FCMB and Guaranty Trust Bank.
Dangote Flour and Union Diagnostic were the best performing stocks for the day, gaining 7.35% and 7.14% respectively to close at N10.95 and N0.30 per share on market sentiment and earnings expectations. On the flipside, Ikeja Hotels and Cutix lost 9.66%% and 8.89% respectively, closing at N1.87 and N2.05 each, on the back of profit taking and impact of market forces.
With the expectation of more 2018 financials, the selloff is likely to subside, but need positive economic statement and policy to give direction while volatility may 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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Tel: 08028164085, 08032055467