Buying Interest Boost Reversal, As March Year-End Accounts Trickle Into NGSE

Market Update for June 25, 2018

Nigerian stock market index started the week on a high volatility and recovery that halted six trading sessions of losses on improved buying interest ahead of March account results the first of which came in during the session, when Chellarams presented its audited financials for the period. There is also hope that company with half-year ended June would begin to present their reports this week, as well as implementation of new pension asset classification, amidst the anticipated take off of the NSE’s new market structure next week.

All of these are expected to impact positively on market fundamentals by way of improved liquidity that will support stability, given in particular, the long-term nature of pension funds that would hopefully reduce the high influence of hot money, otherwise known as foreign portfolio investments. This collection of funds also called smart money is responsible for the high volatility in the market as it exits, making the market unpredictable and planning equity investment planning difficult for players most often.

Monday’s trading started with a drop in the opening session arising from selloff fears and cautious trading, as investors rather adopted the wait-and-see attitude to gauge the mood of the market. This lasted until midday, when the NSE All-Share index attained a lower low before rebounding in the afternoon session when high cap stocks especially Dangote Cement, appreciated in value, as 2.6m of its shares were traded by foreign investors at N230 each, reversing the intraday lows of 37,690.01 basis points to touch highs of 38,003.18bps. There was a slight reversal which ensured that trading finally closed with the index at 37,992.12bps on improved traded volume.

Market technicals were positive but weak as traded volume was low in the midst of flat market breadth and positive sentiments, with Investdata’s Daily Sentiment Report showing ‘buy’ pressure of 96% and ‘sell’ volume, 4% on a volume index of 0.09 of the day’s total transactions.

The energy behind Monday’s investors buying interest reflected on the money flow index at 32.70 points from the previous day’s 30.79 points, which is an indication that funds are entering the market again after six days of sell-off in medium and high cap stocks.

Index and Market Cap                                        

The NSEASI gained 129.59bps at 37,992.12bps, after opening at 37,862.53bps, representing a 0.34% growth on a low volume that was higher than the previous day’s. Similarly, market capitalisation was up by N46.95bn to close at N13.76tr from an opening value of N13.72tr, which also represented 0.34% value gain.

If you are hunting for the right stocks to buy on this oscillating trend, join Investdata Buy & Sell Signal setup. We have a watchlist of stocks for different investment purposes that you may position in, as the market sets for another phrase of recovery. To register and become a member send Yes or stocks to the phones numbers below. Our watch list has increased due to the prolonged correction before now, take advantage of this service to buy right and sell right.

Monday’s upturn was driven by price appreciation in medium and high cap stocks like Dangote Cement, Guaranty Trust Bank, Zenith Bank, FBNH, Unilever, Stanbic IBTC, Flourmill and Honeywell Flour, which impacted positively on the NSE’s Year-to-Date return, reducing the loss to 0.66%. The gain in market capitalisation for the period stood at N98.54bn, a 0.98% rise above the year’s opening value, on the impact of new listings earlier in the year.

Bearish Sector Performance

Sectorial performance for the day was largely bearish and in opposite direction with the general market. All the sectorial indexes were in red except for the NSE Insurance that was flat. NSE Oil/Gas index suffered the most setback, sliding 2.64% down to continue its 5-day down position, due to sell-offs and profit taking in Seplat. Market breadth was at equilibrium as decliners-advancers ratio stood at 21:21 to halt the six-days down market.

Market activities were up in volume and value by 24.02% and 139.67% respectively to 207.41 million shares worth N3.42bn from the previous day’s 167.23m units valued at N1.43bn. The day’s volume was boosted by trading in financial services and consumer goods stocks like UBA, Honeywell, Zenith Bank, FBNH and Sterling Bank and Prestige Assurance that witnessed increased trading to top the activity chart.

Lasaco Assurance and CCNN were the best performing stocks for the day, as they topped the advancers’ table, with 5.88% and 4.85% respectively to close at N0.36 and N25.95 each due to a combination of market sentiment and expectation of better Q2 numbers.

On the flip side, Seplat and CAP were the worst performing, losing 4.99% and 4.89% each to close at N650.80 and N35.00 on profit taking and market forces

Market Outlook

We expect more buying interest to sustain the trend reversal with eyes fixed on March account earnings reports, more of which will start hitting the market. Volatility is likely to continue as investors and fund managers reposition for end of the quarter to earn good fee and commission as equities remain undervalued with higher yields. Investors should review their position in line with their investment goals and take action as events as it unfolds in the global and domestic environment.

However, we would like to reiterate our advice that investors should go for equities with intrinsic value, especially during this season were less earnings are released ahead of march full year earnings release and Q2 interim dividend payment  are expected in the market arena very soon.
We advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst improving company, economic and market fundamentals.

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Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08032055467