Post Views: 215 Market Update for April 8 Equity prices on the Nigerian Stock Exchange (NSE), Monday, nosedived further and continued its volatility a...
Market Update for April 8
Equity prices on the Nigerian Stock Exchange (NSE), Monday, nosedived further and continued its volatility as crisis of confidence deepened, weakening economic fundamentals. The NSE’s benchmark All Share index closed lower on a high traded volume, amidst the continued post-elections selloffs attributed to weak corporate earnings, the non-passage of the budget 2019, as usual, government’s delay in championing new direction for the economy through well defined economic policy and reforms needed to trigger investor interest in blue chip stocks that have suffered huge losses, due to general market meltdown, especially post-presidential election 2019.
However, the fact that the market is making lower lows should create entry opportunities at a time the NSEASI has broken down its last strong support level of 29,336.80 basis points to test a new low. This remains a source of worry for market players, as unfolding trends reveal the earlier prediction by analysts and keen followers of the market.
Monday’s trading opened on the downside in the morning and remained down nearly all day, touching intraday low of 28,780.02bps from a high of 29,620.93bps, before retracing up marginally in the afternoon thereby reducing its losing momentum. In the process, the NSEASI extended its 5-wave decline to finish the session at 29,162.24bps on a negative breadth.
Market technicals for the day were negative and mixed, as volume traded was higher than previous day’s in the midst of mixed sentimentas revealed by Investdata daily sentiment report, showing a sell position of 55% and 45% buy volume of the total daily transaction volume index of 1.16.
The momentum behind the day’s market performance was very weak, as shown by Money Flow Index at 12.32 points, from previous day’s 12.46bps. This is indicating low liquidity and lack of fund, forcing stock prices to decline.
Index and Market Cap
At the end of Monday trading, the benchmark index NSEASI lost 454.14bps to close at 29,162.24bps, after opening at 29,616.38bps, representing a 1.53% decline, while market capitalization shed N170.58bn to N10.95tr, from its opening value of N11.12 trillion, and representing 1.53% depreciation in value.
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The session downturn resulted from selloffs in: Dangote Cement, Guaranty Trust Bank, Stanbic IBTC, Zenith Bank, FBNH Holding , UACN, Flourmills , Access Bank, Dangote Sugar, Dangote Flour, UBA and Transcorp, thereby further impacting on Year-to-Date loss which extended to 7.22%. Market capitalization drop increased to N790.82bn, or 6.82%, from the year’s opening level of N11.72tr.
Mixed Sector Indices
The sectoral performance indexes were largely bearish, except for Insurance and Oil/Gas indexes that closed marginally higher at 0.20% and 0.08% respectively, just as market breadth stayed negative as decliners outnumbered advancers in the ratio of 30:13.
Market activities in volume and value were up by 13.63% and 50.56% respectively, to 455.88m shares worth N5.26bn from previous day’s 401.19m units valued at N3.49bn, driven by financial services and service providing stocks like: Sterling Bank, Guaranty Trust Bank, Tripple Gee, Zenith Bank and Access Bank.
Mutual Benefits and Neimeth Pharmaceuticals were the best performing stocks for the day, with gains of 10% and 9.80% respectively to close at N0.22 and N0.56 per share on the strength of market forces. On the other hand, Fidson Healthcare and Tripple Gee lost 10% and 9.09% respectively, closing at N4.05 and N0.70 each, on weak earnings report and market forces. The loss by Fidson may also be related to its N3bn rights issue which closes Tuesday.
We expect a slowdown in the current trend as traders speculate ahead of Q1, which will give direction into how this year could turn out after seeing the weak 2018 financials. We note also that there are more company’s notifying the NSE of their closed period for first quarter 2019 earnings reports.
Investors look to government’s policy direction as the market faces low liquidity problems in the ongoing earnings reporting season, vis-à-vis market and economic fundamentals.
Given the drop in the prices of major blue chips in recent times, creating entry opportunities, we expect speculative trading to shape the market direction going forward.
The volatility witnessed last week, was driven by traders and investors repositioning ahead of dividend declaration by major listed companies.
The ongoing volatility will continued as investors and fund managers rebalance their portfolios, with eyes fixed on political space and ongoing full year company earnings position and post-election market dynamics. 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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FEE: N10, 000
DATE: April 13. 2019
TIME: 10am – 4.00pm
VENUE:Emerald Hotel, 193, Aba Road Rumuola, Port Harcourt, Rivers State.
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Registration is ongoing
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CRO|Investdata Consulting Ltd
Tel: 08028164085, 08032055467