Market Update for October 8, 2018

It was an interesting session on the Nigerian Stock Exchange on Monday, as the All-Share index closed marginally positive on improved buying sentiments that halted the four consecutive sessions of loss, kick-starting the week as investors awaits Q3 numbers. The relatively peaceful process in party primaries that produced different presidential candidates have set the tone for next year’s general elections.
The composite index gapped higher in the morning and was sustained till midday and into the afternoon, hitting intraday resistance level at 32,476.28 basis points, from lows of 32,383.15bps. It could not, however, get through before pulling back marginally to close the session at 32,444.96bps on a low traded volume that revealed the wait-and-see posture of investors as they continue to digest market dynamics.
Meanwhile, trading activities continued in the week and month with mixed bias on downtrend and recovery, following which market players should focus on economic indices and fundamentals, as corporate earnings reveal the true state of the listed companies to guide their next move. This has become necessary, because governance, it does seem, has been abandoned on the altar of politics.
Worse still, the capital projects in the Appropriation Bills of 2015, 2016, 2017 and 2018 are yet to significantly reflect and impact the economy positively, as signals and mixed economic indices emanating from the Central Bank of Nigeria (CBN) and National Bureau of Statistics (NBS) are pointing to another round of recession, unless urgent steps are taken to stimulate the economy by strengthening productivity.
Monday’s market technicals were positive and mixed, with buying pressure looking up on a positive market breadth, but low traded volume as revealed by Investdata’s Daily Sentiment Report, revealing a ‘buy’ volume of 66% and 34% ‘sell’ position. The volume index for the day’s total transactions was 0.58.
The momentum behind the day’s market performance remained up, as reflected in the money flow index at 56.73bps, from the previous day’s 51.54bps, indicating that funds are entering some stocks as bargain basement pricing attracts new positioning ahead of the earnings season and last quarter seasonality’s in the midst of low market liquidity.

Index and Market Cap
The benchmark index at the end of the session gained 61.81bps, at 32,444.96bps, after opening at 32,383.15bps, representing a 0.19% rise, just as market capitalization was up by N22.56bn to close at N11.84tr, from an opening value of N11.82tr, representing a 0.19% appreciation in value.

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Monday’s upturn was impacted by value gain in medium and high cap stocks like: Nigerian Breweries, Zenith Bank, Guaranty Trust Bank, FBNH, Stanbic IBTC, Conoil, UBN, Caverton and Honeywell, which impacted positively on Year-to-Date negative returns to contract 15.16%, while market capitalization lost N1.79 trillion, representing 12.97% slide from the opening value.
Bullish Sector Performance
The sectorial performance for the session was bullish, led by NSE Insurance and NSE Banking index with 0.77% and 0.42% respectively. Market breadth was positive as advancers outnumbered decliners in the ratio of 16:11, to short-lived bearish transition.
Market activities in volume and value were however down by 27.8% and 9.89% respectively to 120.82m shares worth N1.34bn, from previous day’s 166.65m units valued at N1.49bn.
Transactions were boosted by trading in financial services stocks like: Guaranty Trust Bank, FCMB, NEM, Fidelity Bank and Zenith Bank.
The best performing stocks for the day were Unity Bank and Neimeth that topped the advancers’ table, gaining 9.09%and 8.47% respectively to close at N0.96 and N0.64 per share, as a result of market forces. On the flip side, John Holt and Guinea Insurance lost 9.43% and 9.38% respectively, closing at N0.48 and N0.29 each on market forces.

Market Outlook
As the journey into 2019 elections enters top gear, expect increased activities of bargain hunters in the midst of volatility and profit taking ahead for the Q3 earnings reporting season that kicks off soon. Also, the September inflation data is being expected. Investdata projects that it could be in the region of 11.49%, despite the political risk, with the electioneering spending beginning.
Investors are looking forward to Q3 earnings reports so as to rebalance their portfolios and watch the political space, while analysing the actual numbers that will give insights into expectations for Q3 GDP and full year companies earnings power that are likely to drive prices and determine themarket before or after February election.
Investors should review their positions in line with 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 volatile amidst mixed company, economic and market fundamental.

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Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467