Market Update Jan 31
The first trading month of the year closed on a negative note as the market lost over 50% of the gain it recorded during Santa Claus rally, with the composite NSE All-Share index shedding 838.38 points to close at 26,036.24 points, after opening at 26,874.62 points, representing a 3.12% decline, on a strong ‘sell’ position of 87% and buy volume of 13% on a volume of 4.64 billion shares traded against 5.02 billion shares in December to reverse the bull rally.
Also, in the same period, market capitalisation for the period lost N273.94 billion closed lower at N8.97 trillion from an opening value of N9.25 trillion representing 4.97 % depreciation in value.
As part of the January Effect, profit takers besieged the market for funds to meet pressing needs associated with the season, besides the dwindling confidence at a time macro-economic indicators are crimson red resulting from the uncertainly surrounding fiscal policies, with government seemingly not doing enough to offering the needed reassurance. Add this to the lack of a clear direction by the same government which has always being a major source of worry to investors.
This weak confidence in the whole system has kept the market in this up and down movement and following which it closed lower, although one must not fail to add that this is better than the comparable period of 2016.
The recent quarterly earnings that released in last few days of the month revealed that the harsh business environment continues to impact negatively on all the sectors, particularly manufacturing and real sectors operators.
For the best and worst performing equities for the period kindly see the table below.

MONTHLY TIME FRAME NSEASI

The NSEASI on monthly time frame has formed symmetric triangle chart pattern and moving to strong support level of 25,241.63 if market forces do not go positive in the new month. The momentum and trending ability of the market on a monthly time frame is strong as ADX is below 20. The probability of the market remaining in this direction for the rest of the week is high as momentum is low. Once the trend line is broken it confirms a weaker market. The index is trading below its 20-Day moving average. Traders should watch out.
Analyst Opinion: Reversal is imminent as smart money cashes in on the ongoing market correction phase to reposition their portfolio for December 31, 2016 earnings season that is just kicking off with FO’s audited result as momentum to other sectors financial, service and oil/gas sectors will increase as dividend stocks in that industries attract investors.