Investors position Ahead Of Q2 Earnings Reports On NGSE, Await Positive Fiscal Sentiments

Investors position Ahead Of Q2 Earnings Reports On NGSE, Await Positive Fiscal Sentiments


Post Views: 264 Market Update for July 8 Market correction amidst low trading activities continued on the Nigerian Stock Exchange (NSE) on Monday, des...

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Market Update for July 8
Market correction amidst low trading activities continued on the Nigerian Stock Exchange (NSE) on Monday, despite the marginal gain recorded by the composite index. The bears technically dominated trading ahead of the earnings reporting season that kicked off with the release of impressive numbers for the half year ended June 30, 2019, by Infinite Trust Mortgage Bank. Highlights of the result showed that gross earnings rose by 44.73% to N667.70m, out of which net profit stood at N211.45m, representing 49.96% rise from that of the prior half year.
It was also a mixed session for the benchmark NSE All-Share Index as it opened lower in the morning and remained so until midday then retraced up in the afternoon to touch intraday high of 29,312.93 basis points from a low of 29,216.70bps. This was just as buying interest increased in the shares of dividend-paying companies whose scorecards are underway.
The index, however, managed to finish the day slightly above its opening figure at 29,287.87bps on a low traded volume, after experiencing a free fall last week to test another major strong support level of yellow line as indicated in the chart above, suggesting a break down or reversal at this point, depending on market forces today. The market is, therefore, looking up to any positive statement and direction from the government by way of its expected economic policy and appointment of a new cabinet to begin implementation of the 2019 budget.
It is also on record that crude oil at the international market continues to oscillate above the budget benchmark price.

NSE ASI Daily Time Frame
Monday’s market technicals were positive but mixed as volume traded was lower than the previous day’s, amidst positive breadth and high buying pressure as revealed by Investdata’s Daily Sentiment Report. The session ‘buy’ position was 79% and ‘sell’ volume of 21% of the total daily transaction volume index of 0.48.
The impetus behind the day’s performance remained seriously weak with little improvement as Money Flow Index reads 11.81points, which was higher than the previous day’s 6.84bps. This shows that funds are gradually re-entering the market, despite the low trading activities and size that confirmed low liquidity and caution among traders and investors.

Index and Market Cap
The All-Share index at the close of trading gained 16.92bps, to close at 29,87.87bps after opening at 29.270.95bps, representing a 0.06% growth, just as market capitalization was up N7.46bn to close at N12.91trillion, from its opening value of N12.9tr, which also represented 0.06% value gain.
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The day’s upturn was driven by buying interest in low, medium and highly cap stocks like MTNN, Access Bank, UBA, FBNH, Flour Mills, Nahco, NEM, and Wema Bank, which had a slightly positive impact on the Year-to-Date loss position, reducing it to 6.82%. Market capitalization gain stood at N1.19tr, or 10.14%, from the year’s opening level of N11.72tr.

Mixed Sector Indices
The sectoral performance indices were largely bullish, except for the NSE Banking and Oil/Gas that closed lower by 0.09% and 1.44% respectively. The Insurance index topped the advancers table, chalking 0.96%, followed by Consumer Goods, 0.20%, while Industrial Goods index gained a marginal 0.02%.
Market breadth was positive as advancer outnumbered decliners in the ratio of 17:14. Market activities were mixed with volume traded dropping by 27.5% to 218.29m shares, compared to the previous day’s 298.4m units, while value climbed 4.98% up to N2.27bn from the previous day’s N1.83bn. Volume was driven by trades in financial services stocks like Wapic Insurance, FBNH, Zenith Bank, Mutual Benefits Assurance and UBA.
Flour Mills and Unity Bank were the best-performing stocks, after topping the advancers’ table, with gains of 10% and 9.60% respectively to close at N16.50 and N0.68 per share, on earnings expectation and market forces. On the flip side, Forte Oil and GSK lost 10% and 9.80% respectively, closing at N24.30 and N9.20, on market forces and profit taking.

Market Outlook
We expect mixed performance to continue as investors look to positive pronouncements from the government and its agencies, as bargain hunters take advantage of the subsisting bearish trend and buy ahead of the half-year earnings reporting season. Discerning investors should target value stocks considering the low valuation to position for dividend income.
They may also take into consideration the expected economic reforms as government announces its much-awaited new cabinet, just as Central Bank of Nigeria (CBN) had rollout it plans to boost productivity and investment by instructing the banks to lend more to the private sector. This is aimed at reducing banks’ participation in government securities and lending more to the private sector to drive economic growth.
There is also the likely impact of portfolio repositioning for the second half of the year in the midst of expected Q2 numbers, especially banking stocks.

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CRO|Investdata Consulting Ltd
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