Amidst Mixed Outlook, Q3-end Window Dressing, NGSE Awaits Traders, Investors For Direction

Market Update for September 25
Negative sentiments persisted on the Nigerian Stock Exchange (NSE) at the midweek, There was however a seeming slowdown in the losing momentum on a very high traded volume with more selling pressure than buying interest during the session.
The faded optimism in the last three trading sessions, irrespective of the quarter-end balancing of trading accounts and repositioning by fund/portfolio managers did not reflect in the trading pattern due to indecision among market players and low market liquidity.
Technically, the market remains dicey at this point with MACD, and money flow index slowing down and looking south, while parabolic stop and reverse are looking positive. This suggests that trading activities on Thursday and Friday would confirm direction and how the month will end. The performance of Q3 early filers in the month of October will also be a factor in the market. Whether they will be positive or negative will depend on their actual results, given that earnings season is a time for investors to truly assess company performances and align their portfolio with positive results. While disposing the negative or poor performing companies ahead of the fiscal and financial year-end, investors, just like analysts will also seek to interpret available macro-economic indices. They will factor in also the expected corporate earnings that will give insight into how the companies had faired during the quarter, before the GDP figure in December.
Wednesday’s trading opened slightly on the upside in the early hours of trade, but pulled back at the mid-morning to midday on continued selloffs in bellwether stocks and oscillated in the afternoon. It then touched intraday low of 27,267.16 basis points, from a high of 27,371.59bps, before retracing up marginally to close the day lower at 27,283.05bps on a huge traded volume.
The market technicals were negative, but mixed as volume traded was higher than previous day’s in the midst of market breadth favouring the bears, while negative sentiment was revealed by Investdata’s Daily Sentiment Report, which showed ‘sell’ position of 85%, while ‘buy’ volume stood at 15% on total daily transaction volume index of 2,02.
The impetus behind the day’s performance was weak as Money Flow Index read 48.73 points, from the previous session’s 53.85bps, indicating that funds exited some stocks and the market. This, however, indicates a sell-down, making the situation somewhat dicey for market players and watchers. Discerning traders and investors need not panic out of position but wait.

Index and Market Cap
Midweek’s trading closed with the NSE All-Share Index shedding 69.19bps to 27,283.05bps, from its 27,352.24bps opening level, which represented a 0.25% drop. Market capitalization lost N33.68bn at N13.28tr, from an opening value of N13.31tr, which also represented a 0.25% value loss in investors’ portfolio. At the close of Wednesday’s trading, MACD and Money flow index closed south, a sign of weakness despite remaining in the bullish zone. Market forces at the end of the week’s trading will, however, determine the next direction and action of investing public.
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The day’s downturn followed sell-down in stocks like Dangote Cement, MTN Nigeria, Zenith Bank, Guinness Nigeria, Skypower Aviation and UACN Property, among others. This impacted negatively on the NSE’s Year-to-Date loss, as it increased to 13.20%, even as YTD market capitalization gain dropped to N1.57 trillion, representing 13.34%, from the year’s opening level of N11.72tr.

Mixed Sector Indices
The sectoral performance indexes were largely bullish, except for the NSE Industrial Goods that closed 0.55% lower, with the NSE Insurance index leading the advancers, after gaining 2.99%; followed by the 0.54% notch by the Consumer Goods index; just as the NSE Banking index gained 0.23%.
Market breadth remained negative as decliners outnumbered advancers in the ratio of 15:13; while market activities in volume and value were up by 200.14% and 180.51% respectively to 462.32m shares worth N7.92bn; from previous day’s 154.03m units valued at N2.83bn. This volume was boosted by transactions in Access Bank, Custodian Investment, Nigerian Breweries, FBN Holdings, and UBN.
Continental Reinsurance and Custodian Investment were the best-performing stocks for the session which gained 9.53% and 7.89% respectively, closing at N1.72 and N6.30 each, on the back of market forces and recapitalization in the insurance sector. On the flip side, Skypower and Uacn Property lost 9.89% and 9.84% respectively, closing at N4.19 and N1.10 on selloffs and profit-taking respectively.

Market Outlook
The outlook remains mixed with the expected profit-taking, as investors position ahead of the quarter-end, while bargain hunters take advantage of low stock prices to position, now that the NSE index has pulled back. Discerning investors should latch on it to average down and recoup their investment immediately a recovery stage is set through economic policies and things start to change gradually to influence equity prices positively, while investors watch these sectors that have become defensive recently like insurance, banking, industrial goods, services, and oil/gas that will go bullish in no distance time. Also, with all eye fixed on the newly appointed economic advisory council to settle down and kickoff.

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CRO|Investdata Consulting Ltd
Tel: 08028164085, 08032055467

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