Market Update for the week ended November 23 and Outlook for Nov. 26-30
Last week, Nigeria’s stock market extended its bearish ascendancy as the benchmark All-Share index hit 17-month low on a high traded volume, breaking down the 32,000 points psychological line and 31,854.40 strong support level which resulted in selloffs in medium and high cap stocks that continued to dragged the general performance lower.
The high volume traded for the period, despite Tuesday’s public holiday, was largely driven by transactions in Zenith Bank and Diamond Bank, which in the last three months had positive technicals, resulting in the September rebound after touching a low of N19.60 due to sustained uptrend on improved transaction volume. This is why it has recorded 1.05 billion transaction volume so far in November, the highest so far in 2018, while monthly buying position stood at 71% and sell volume at 29% for the period. Transaction volume index for the period stood at 1.97. Notice also that since Zenith Bank released its third quarter earnings report, market sentiment and perception has remained positive owing to the robust balance sheet and profitability levels that support possible high dividend payout at the end of current financial year.
Diamond Bank has however suffered huge losses within the period due to its high non-performing loans profile, and the recent exit of its chairman and three directors, a situation the said chairman has debunked. Add this to the weak Q3 numbers that triggered selloff in the bank’s share as revealed by monthly sell position of 83% and buy volume of 17%, with monthly transaction volume index of 1.10 and then you get a seemingly unpalatable picture.
Meanwhile, it was a very volatile week as the NSE All Share index opened the week on a positive note, before turning red on Wednesday, Thursday and Friday, despite the seeming decline in October inflation rate and outcome of MPC meeting. Analysts had already anticipated that the MPC will retain the rates, since expected variables like implementation of 2018 budget, election spending and oil price are yet to impact the economy and liquidity level.
Selling pressure was high especially in the banking, industrial and Oil/Gas sector as market technicals stayed negative and mixed, on high volume traded and positive market breadth and strong selling pressure as revealed by Investdata’s weekly Sentiment Report, showing a sell volume of91% and buy position of 9%. The volume index of total transactions within the week was 1.01.
The energy behind the week’s performance were weak and flat as blue chip stocks suffered losses, reflecting on the money flow index at 30.54bps, from 30.85bps in previous week, an indication that funds are leaving some stocks and market in the midst of low liquidity and dwindling economic fundamentals.
Equity Indicators Last Week
The composite index for period shed 379.58 basis points to close at 31,678.708bps, after opening at 32,058.28bps, after hitting a high of 32,357.20bps, from low of 31,610.43bps on high volume. Similarly, market capitalization closed at N11.57tr, from N11.7tr, representing 1.18% value loss.
The advancers’ table was dominated by Low and medium cap stocks as bargain hunters took advantage of the prevailing low price to accumulate position as many stocks hit their new 52 week low.
Meanwhile, the NSEASI’s year-to-date negative returns dipped to 17.17%, just as market capitalization dropped to N2.05tr, or 15.18% below the year’s opening value.
Mixed Sectors Indices
The sectorial performance for the period was largely bullish, except for the NSE Banking and Industrial Goods indices that were down. Market breadth was positive, with advancers outnumbering decliners in the ratio of 30:24, to continue the previous week’s down market.
Activities in terms of volume and value were up by 12.60% and 124.72%% respectively to 1.35bn shares worth N25.93bn, from the previous week’s 1.29bn shares value at N11.54bn boosted by trading in financial service, and Oil/Gas industry.
Prestige Assurance and PZ were the best performing stocks for the week, after gaining 41.07% and 18.02% respectively to close at N0.79 and N10.65 per share, on bonus issue and low-price attraction. On the other hand, Ikeja Hotel and Lafarge Africa lost 18.54% and 12.58% respectively, close at N1.67 and N14on market trend and weak earnings power.
Market Outlook
we expect overall market sentiment to remains weak with the most pressure coming from banking, and oil & gas stocks amidst uncertainty in the global crude oil market that continues to weigh on investors sentiment. However, we expect the bargain hunting for cheap stocks with strong fundamentals to continue this week.
while watching the political space, since Q3 numbers have given insights into what the expected Q3 GDP and full year company earnings power will be.
As the presidential campaign kicks off, Nigerians are expecting new demission, new strategy, new roadmap to address the economic issue, poverty, development human capital, infrastructure and education with deliverable time. These campaigns are likely to drive prices north, or south, while determining market direction before or after Presidential 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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Invest 2019 Traders & Investors Summit
Theme: Best Returns In 2019 & Beyond: Adopting The Billionaire Mentality In Stock Selection
Sub-Topic
1. Pre-election year performance Review and post-election Investing opportunities
2. Simple Strategies for picking undervalued stocks With Fundamental & Technical Tools
3. Psychology of Equities Trading For Managing Positions & Money
4. Mastering Market Dynamics & Dividend Techniques To Grow Your Income in 2019
5. Picking the Right Stocks to Retire Rich In Financial Independence
6. Nigeria’s Post Election Economy & 2019 Sectoral Analysis
7. Understanding the big picture of Budget Delay & Its Implication on the Economy/Stock Market
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Date: Saturday, December 8, 2018.
Time: 10a.m.
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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
