Market Update for March 21, 2018

The nation’s stock market at the midweek had a very volatile session, continuing sixth consecutive trading day of downtrend on weak institutional money flow and negative market reactions that has resulted in persisting sell-offs to this level, thereby creating opportunities for reversal on the strength of expected improved liquidity and demand for stocks to reverse the trend. The day started-off on a corrective wave moving down in the mid-morning to retrace up by the afternoon, but closed lower than it opened.
The Nigerian Stock Exchange’s All-Share index rallied back sharply after breaking down the 38.2% Fibonacci retracement right up to resistance. When it was unable to get through the strong support of 41,235.34 after testing it from intraday high of 41,693.11.
The seeming non-reaction of the market to the influx of earnings release so far continued despite the impressive dividend payouts particularly from blue chip companies, especially Dangote Cement, Nestle, Zenith Bank, GTBank, and others. Also on Wednesday, Access Bank joined the train, recommending a 40 kobo final dividend, which however came below market expectation.
The up movement of traded volume in a continued down market is of serious concern for traders and investors in an earnings reporting season, even as numbers continue to beat market forecast and expectations.
This current state of the market therefore calls for change of strategy to profit from this season. However, INVESTDATA still believes that the Nigerian market will rebound eventually when bargain hunters hit the market as they seek to take advantage of the prevailing high Dividend Yields because of the relatively low equity prices as more numbers are being release.
Market technicals remained weak and mixed with buying pressure improving to 57% on a relative low volume traded that signals improved investor sentiment for low cap stocks, while selling volume stood at 43%. Volume index was 0.93 with money flow index momentum weak at 28.12 point from the previous day’s 34.47 points.
Meanwhile, the composite index shed 190.93 points to close at 41,496.25 basis points after opening at 41,686.36bp, representing a decline of 0.46% on low traded volume that is higher than the previous day’s. Similarly, market capitalisation shed N68.37bn to close at N14.84tr from an opening value of N14.89tr which also represented a 0.46% value loss.
The day’s downturn resulted from price decline of low, medium and high cap stocks which impacted negatively on the NSE’s Year-To-Date returns, cutting it down at 8.5%, just as market capitalisation gains for the period stood at N1.23tr, representing 9.20% YTD growth.
The All Share index and other market indices were lower, except for NSE Banking that closed marginally higher after suffering huge loses in the previous trading sessions. Market breadth for the day remained negative as decliners outweighed advancers in the ratio of 35:19, while market activities were up in volume and value by 22.7% and 44.4% respectively to 488.7m shares, worth N5.64bn from the previous day’s 409.21m units valued N3.92bn.
Transaction volume was boosted by financial services and oil/gas stocks like: Africa Alliance Insurance, Japual Oil, Fidelity Bank, Zenith Bank and FBNH, which witnessed increased trading to top the activity chart.
Fidelity Bank and GSK were the best performing stocks, as they topped the advancers table, gaining 7.76% and 5.0% to close at N2.50 and N22.05 respectively on earnings expectation and special dividend of N7.50 per share, while Cadbury and Unity Kapital were the worst performers, shedding 9.64% and 7.69% to close at N12.65 and N0.24 respectively on negative reaction to low dividend and market forces.
Market Outlook
We expect the improved sentiment to continue as bargain hunters take opportunities of low prices in expectation of more earnings reports hit the market up till Friday and beyond, especially as companies have up to Thursday of next week to submit their December year-end audited result to meet the regulatory deadline for such. We do not expect this pullback to linger on, in a recovering economy with the outpouring of stronger corporate earnings, positive economic data and transparent market that is technology driven.
Also, expect repositioning to continue, while profit taking will reduce on the strength of expected payouts and earnings surprises.
However, we would like to reiterate that investors should not panic but go for equities with intrinsic value, especially during this season when dividend payment is ongoing.
We advise investors to allow numbers guide their decisions while repositioning for the year’s trading activities, especially now that stock prices remain volatile amidst improving company, economic and market fundamentals.
It is time to combine fundamentals and technical tools to take decision by knowing the support and resistant level to reposition or exit any position. A stock market is in cycles. You must know the cycle it, or particular stocks therein are to successfully manage your trading and investment risk. For stocks that should be on your shopping list to buy in these seasonal changes as the year unfolds, sign up to INVESTDATA BUY AND SELL signal setup by calling 08032055467.
Get your home study pack of the INVEST 2018 Traders & Investors Summit and ride with the current recovery on Nigeria’s stock market and economy, thereby ensuring that you invest and trade with knowledge. You can also access stocks analysed in the home study pack of the Chart Summit held on February 24, 2018, including the 15 stock-picks for 2018 are available now to guide your positioning as trading for the year.
Comprehensive training materials on stock Trading and Investing for Financial Independence series are Available, you can play and watch on your mobile phone, laptop, desktop and TV set. Kindly call or send yes to 08032055467, 08028164086 or 08111811223.
We say big thanks to all the participants and resources persons that made Investdata Investment education workshop debut in Port Harcourt a success. The trading and investing education train move to Abuja on April 14, 2018.

Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
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ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467