Market Update for the week ended Sept 21 and Outlook for Sept 24-28
The increasing activities of bargain hunters on the Nigerian Stock Exchange (NSE) during the week dampened the sell pressure. Many stocks, including penny and bluechips, resisted further decline after touching their 52-week low before rebounding on low risk entry points that attracted short term positioning.
This recent trend is likely to slow down as investors react to Friday evening’s sudden revocation of the operating license of Skye Bank by the Central Bank of Nigeria (CBN).
This was aftermany investors had traded the stock that same day (READ MORE), plunging many investors and traders into losses overnight. Moreso, trading in the shares of Skye Bank was suspended by an obviously shell-shocked NSE management that Friday night (READ MORE).

NSE Weekly Time Frame

Friday’s action will worsen an already low investor confidence level in the market and regulators who claim to be protecting investors. While in this case the depositors are protected by the Nigeria Deposit Insurance Corporation (NDIC), the fate of shareholders continue to hang in the balance. This is a repeat of the incidents of the recent past wherethe same investors suffered alone.
This latest action of the CBN will trigger another around of panic and fear in already depressed market that is trying to resist decline in the last few trading sessions. Recall eight months of correction has wiped out all the gains recorded earlier this year and more than half of that of 2017.
With the parties primaries holding soon to determine the flag bearers of each party, who will then sell their manifestos that will guide Nigerians in their voting decisions, and also help investors make their decision.
As we continue to trackfundamental breadth, technical patterns and sentiment to time market turn-around in a bull or bear cycle that allows investors and traders to position right. To enjoy the combination of these analysis kindly joinInvestdata ‘Buy and Sell Signal Setup’ membership, where you can look over our shoulders and follow to know when to hold cash, or take advantage of the watchlist of stocks for different investment purposes that you can position in for maximum gains in the coming weeks and months. This is given that the lingering market decline has and continues to create new entry opportunities. To become a member, send: YES or STOCKS to the phone numbers below. The number of stocks on our watch list has increased due to the prolonged market correction. Take advantage of this service to BUY and SELL right.
The major factor that had put pressure on the emerging markets as mentioned earlier, this week again, US 1Oyear yields traded as high as 3.09%. These 3%+ levels have proven to spook stock markets on all other occasions this year. But it hasn’t this time. In fact, the US market closed the week on new record highs. The prospects that Fed normalization might be slowing, and that 10-year rates may be carving out a new/higher range, reduces the prospects of seeing the yield curve “invert.” That’s positive for stocks.
Equity Indicators Last Week
The composite index for the period rebounded to remain above 32,000 psychological line after touching highs of 32,784.33 from the week lows of 32,180.72 point before closing higher. The index gained 212.58bps, closing at 32,540.17bps from an opening figure of 32,327.57bps, which represented a 0.66% growth on a higher traded volume, compared to previous week. Market capitalisation was up by 0.66%, closing at N11.88 trillion, from the previous N11.80 trillion, as a result of seeming rebound in blue stocks that suffered huge losses in this downturn.

Low cap stocks during the week dominated the advancers chart especially the once selling below 50 kobo which most are insurance companies and others including the battered Skye Bank that was taken over by CBN last Friday. Insurance suffered huge losses over the week as Investors took profit and apply caution as recapitalisation exercises is ongoing, knowing that some may not meet the deadline.
Meanwhile, the NSEASI’s year-to-date negative returns reduce to 14.91%, just as market capitalisation yielded negative returns of N1.68 trillion, or 12.69% below the year’s opening value.

Bullish Market Breadth
Market breadth for the period was positive asadvancers outpaceddecliners in the ratio of 50:25, amidst improved demand for highly capitalized stocks.
The market recorded a mixed performance, with the index opening for the weeknegative, losing 0.58% at the end of Monday. This was reversed on Tuesdaywhen itgained 0.48%, before closing flat at 0.03% down by midweek. It then retraced up on Thursday and Friday gaining 0.33% and 0.18% respectively to close the week positive with 0.66%, compare to the previous week’s 5.02%loss.
Sectoral performance indexes for the period were in the green except for the NSE Insurance and NSEAseM that finished lower.
Market activities for the period were up in volume and value terms by 24.46% and 6.38% respectively to 1.37bn shares worth N19.5bn, from previous week’s 960.94m units valued at N18.33bn.
Best performing stocks for the week were Union Diagnostic and First Aluminum that topped the advancers’ table, gaining 26.67% and 23.33% respectively, to close at N0.38 and N0.37each, due to their low price attraction and market sentiments. The worst performing were Standard Alliance Insurance and AXA Mansard Insurance with 20% and 19.13% decline respectively, closing at N0.20 and N1.86 each on market forces and profit taking.
Market Outlook
We expect a slowdown on Monday and Tuesday, as investors and traders await the outcome of the Monetary Policy Committee (MPC) meeting, whose impact will reflect in the market at the midweek trading. There will also be end of quarter window dressing by fund managers, just as repositioning of portfolios ahead of Q3 earnings reporting season. However, we believe investors can take advantage of the current low prices of stocks with strong fundamentals to reap medium-to-long term benefits. Stage by stage buying is advised as party primaries are around the corner, even as the inclusiveness of the Osun state governorshipelection has given insight of how tight the 2019 general election could be.
There could be repositioning on the strength of earnings in the midst of unfolding events in the political environment. Investors should review their positions in line with their investment goals and take action as events unfold in the global and domestic environment.
However, we advice once again that investors should go for equities with strong intrinsic value, ahead of end of quarter, which will usher in another earnings season, ahead of Q3 interim dividend paying equities in October/November, due to the auditing process of their financials for Q3.
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
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