Post Views: 102 Market Update for October 7 Transactions on the Nigerian Stock Exchange on Monday remained weak as the composite All-Share index conti...
Market Update for October 7
Transactions on the Nigerian Stock Exchange on Monday remained weak as the composite All-Share index continued its downtrend from the end of last week, closing lower on negative sentiment, defying the seeming resistance and rebound signals given earlier before now. This was attributed to a seeming confusion, resulting in sell-down by some fund managers tired of waiting in the continued loss position for a prolonged period of time as fiscal and monetary policy authorities become unclear a few days into the last quarter of the year 2019.
The current trend or patterns seem to portend, the possibility that stocks will oscillate in the days to come, but not without worries among players before the earnings season kicks off properly at the midmonth. As one of the many breadth measures we monitor is the intraday performance of the NSE index, which shows the average path that the index has taken throughout the trading day over different time frames. However, the smart money indicator suggests that institutional investors and traders are weighing negatively on the market as they exit position at loss.
Meanwhile, the day’s trading opened on the downside and was sustained throughout on selloffs in high and medium cap stocks, which pulled the benchmark index down further, as it touched intraday low of 26,835.58 basis points, from its high of 27,004.47bps. It then retraced up marginally, closing at 26,866.41bps on a low traded volume that signaled a wait-and-see among investors and traders for 2019Q3 company financials.
Monday’s market technicals were negative and mixed, as volume traded was higher than the previous day’s in the midst of flat market breadth and high selling pressure. This was revealed by Investdata sentiment reports showing sell volume of 82% and buy position of 18% with the day transaction volume index of 0.74. Also, the daily time frame MACD was bearish, while the Money flow index remained relatively weak and even looking down.
Index and Market Cap
The All-Share index lost 121.04bps at the end of Monday’s trading, closing at 26,866.41bps from its 26,987.45bps opening level, which represented a 0.45% decline, just as market capitalization dropped by N58.93bn, the same percentage margin, to close at N13.08tr, from its opening value of N13.14tr.
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The session downturn was driven by losses suffered by stocks like Nestle, Dangote Cement, Seplat Petroleum, Access Bank, UBA, Wapco, Oando, Dangote Sugar and Transcorp, among others. This impacted negatively on the NSE’s Year-to-Date loss, which heightened to 14.52%, while YTD market capitalization gain fell to N1.28 trillion, representing 12.01% improvement over the year’s opening level of N11.72tr.
Bearish Sector Indices
All the sectoral performance indexes closed red except for the NSE Industrial Goods index that closed in green with 0.10%, while NSE Oil/Gas index led the decliners after shedding 4.18%, followed by the NSE Consumer Goods and Insurance indexes at 1.18% and 0.22% respectively, just as the NSE Banking index slipped by a marginal 0.13%.
Market breadth was flat and positive as advancers outnumbered decliners in the ratio of 17:16; while market activities in volume and value were up by 9.35% and 48.35% respectively to 151.72m shares worth N1.5bn; from previous day’s 138.88m units valued at N1.03bn. The day’s volume was driven by transactions in FCMB Group, Transcorp Plc, FBN Holdings, Access Bank and Zenith Bank.
Courtville Business Solution and Africa Prudential were the best-performing stocks for the day, after gaining 10% and 9.94% respectively, and closing at N0.22 and N3.87 each, on the back of market forces and earnings expectations respectively. On the flip side, Cornerstone Insurance and Seplat lost 10% and 6.85% respectively, closing at N0.36 and N517 on profit-taking.
We expect the mixed trend and patterns to continue on selloffs and bargain hunters take advantage of the pullback to position ahead of quarterly scorecards, especially now that the NSEASI has tested a new low recently and rebounded on that same day, which is a good sign of reversal if it will be supported by positive sentiments. However, let the interplay of market forces determine direction.
Discerning investors should latch onto this, meanwhile, as a way of averaging down and recouping their investment immediately a recovery stage sets in, helped by economic policies, when things start to change gradually. In the process, equity prices will be influenced positively, while investors watch for sectors like insurance, banking, Industrial Goods, services, as well as oil/gas that have become defensive in recent times and could go bullish in no distant time.
Furthermore, we note that all eyes are on the newly appointed economic advisory team to settle down quickly and begin churning out policies capable of turning things around.
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