Market Update for Feb 22
The Nigerian equity market has been struggling since the beginning of the week to find direction despite the few earnings that were released so far which seem to support the three-day bull transition that was halted at the midweek when the market closed marginally lower.
Investor optimism at this earnings season is however being weighed down by a mix of low liquidity, weak market and economic fundamentals all of which have continued to push equity prices south as investors continue to sit on the fence, watching for economic direction, a factor that has for long constrained the market. Even with more companies releasing their board notifications to discuss the 2016 financials and considerations of dividend payment, the market is still foot dragging, to reflect the low confidence in the market and the economy.
The presidency and the National Assembly must collaborate to put measures in place for revamping the economy again, in addition to looking at some policies of the government that have contributed to this situation to review them, just as Central Bank of Nigeria (CBN) earlier in the week by trying to make sure that the nation’s foreign exchange policy is reviewed and adjusted to make sure Nigerians and businesses have access to FX through improved supply while banks sell to those who truly needs it. This move also is expected to boost the banks performance and reduce the rate of downgrade by rating agencies of our bank due to prevailing economic situation of the nation. With the National Assembly collaborating in the interest of the nation, it is expected that the 2017 budget should be deliberated upon and passed early to savage the situation so that companies, businesses and investors can have direction and plan.
Meanwhile, the composite NSE All-Share Index shed 1.89 points to close at 25,249.74 points from an opening figure of 25,251.63 points, representing a 0.01% marginal decline on low volume of trades to reverse the seemingly bull sentiment during trading as investors reaction to the earnings released so far remains mixed.
Trading activities reversed Tuesday’s bull position on a marginal decline with buying volume at 83% and selling volume of 17%, to close the day, just as market capitalisation lost N0.65 billion to close at N8.74 trillion from its opening value of N8.74 trillion, representing 0.01% depreciation in value.
The loss in value pushed the NSE All-Share index’s year-to-date negative position to 6.05%, just as market capitalisation for the same period adjusted down to N508.55 billion, representing 5.50% loss for the same period.
Market breadth was negative and weak as the number of decliners outpaced advancers in the ratio of 21:11 to halt the three-day bull run.
The day’s traded volume and value were down by 28% and 35% respectively to 118million shares worth N1.80 billion as against the previous 125 million shares valued at N2.75 billion.
Transactions in financial service stocks like Zenith Bank, United Capital, Fidelity Bank, and Daimond Bank as well as Transcorp, dominated the activity chart as most traded equities by volume.
The NSE All-Share index and all sectoral indices were mixed in performance to close the day’s transaction.

DAILY TIME FRAME NSEASI

The NSE ASI on a daily time frame seems to be struggling to find direction as revealed by the chart still within descending triangle chart pattern and falling channel, trying to retrace up after the formation of double bottom level at 25,095.14 points. At the same time, index has refused to breakdown the 25,000 psychological lines, despite the mixed sentiment. Again, the low volume traded also signals accumulation by smart money, especially as the market is coming out of its oversold region and earnings season is equally entering its peak.
Market sentiments of service companies, especially banking, few insurance, agribusiness and petroleum remain positive amidst expectations that they may support reversal of the market in the short term.
The trending ability of the market on a daily time frame is strong, as ADX is above 20 at 29.11.

UCap investors should wait to take dividend, while foreign investors participation in NB has sustained the price in the up direction.