Equities

Expect Mixed Session On Profit-taking, Buying Interest In Interim Div Stocks

Tuesday’s was another volatile and mixed session on the Nigerian Stock Exchange, as investors extended the mixed sentiment, halting the bear transition of previous days on a high selling pressure and an above-average traded volume.

However, NSE’s key performance All-Share index closed slightly higher with the help of interim dividend paying stocks that inched in value as investors positioned ahead of their half-year audited earnings reports.

The nation’s wobbling economic fundamentals in the face of continued policy summersaults, mismatch and the weak reform agenda now shutting foreign and domestic investors out of the economy and the stock market, despite the prevailing huge opportunities due to the low interest rate, among others.  This is just as the gloomy state of the exchange market has further dampened confidence in the system, even when the government says it could appropriate as much as N12.66tr in 2021.

As the expected earnings reports of first-tier banks bring the half-year earnings reporting season to a close, the numbers will, expectedly, lead and support market fundamentals through this month.

As such, investors should focus on banking stocks with half-year dividend policies, and a few other March year-end audited accounts still being expected, in addition to companies whose shares will be adjusted or marked down for the recently announced corporate actions.

Tuesday’s trading opened on a red note and this lingered till midday, before turning green and oscillating for the rest of the session on strong profit booking and positioning in financial stocks. These pushed the NSE index to an intraday high of 25,136.49basis points, from its low of 25,132.67bps, before closing slightly above it opening at 25, 136.49bps.

Market technicals for the day were positive but weak with higher volume traded than previous session in the midst of breadth that favoured the bulls on negative sentiments as revealed by Investdata’s Sentiment Report showing 100% ‘sell’ position. Total transaction volume index stood at 1.29 points, just as the impetus behind the day’s performance remained relatively strong, with Money Flow Index reading 67.42points, from the previous day’s 66.28points. This is an indication that funds entered some stocks and the market.

Index and Market Caps

At the end  of Tuesday’s session, the All Share Index gained a marginal 3.82bps, closing at 25,136.49bps, from its opening figure of 25,132.67bps representing a 0.02% rise, just as market capitalization  rose by N1.99bn, closing at N13.11tr, which also represented 0.02% value gain.

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The day’s upturn was due to price appreciation of medium and high cap stocks like Guaranty Trust Bank, Zenith Bank, Access Bank, UBA, Flourmills, Guinness, Dangote Sugar and United Capital. This expectedly impacted mildly on the NSE, as Year-To-Date loss reduced to 6.35%, while market capitalization YTD gain dropped to N152.36bn, or 1.19% above the year’s opening value.

Mixed Sector Indices

The performance index across sectors were largely bearish, except for the NSE Insurance and Banking that closed 0.89% and 0.52% higher respectively, while the NSE Oil/Gas led the decliners after losing  1.83%, followed by the NSE Consumer and  Industrial goods  with 0.12% and 0.02% down respectively. 

Market breadth was positive as advancers outnumbered decliners in the ratio of 16:13, while transactions in terms of volume and value were up by 54.69% and 38.87% with investors exchanging 271m shares worth N2.46bn, from Fri Monday’s 161.23m units valued at N1.85bn. This volume was boosted by trades in Zenith Bank, Guaranty Trust Bank, Lasaco, Access Bank and Transcorp.

University Press and Cornerstone Insurance were the best performing stocks, as they topped the advancers table, gaining 9.91% and 9.43% respectively to close at N1.22 and N0.58 per share on full-year earnings expectation and market forces. On the flip side, Conoil and Ardova lost 9.76% and 9.68% respectively, closing at N15.25 and N12.60 respectively on selloffs.

Market Outlook

We expect a mixed performance on profit taking and buying interest as interim dividends from Stanbic IBTC, GTB, Zenith Bank, Access Bank and UBA keeps the market above 20 day moving average on daily time frame, while the prevailing 12.82% inflation rate may influence investment decisions and flow of funds. The mixed intraday movement is likely to persist in the midst of profit booking and investors repositioning their portfolios ahead of Q3 numbers. This is also against the backdrop of the fact that the capital wave in the financial market may persist in the midst of relatively low-interest rates in the money market, high inflation and unstable economic outlook for 2020 as government and its economic managers are going front and back with mismatch polices.

Also, investors and traders are positioning in anticipation of interim dividend pay companies earnings reports, amidst the changing sentiments in the hope of improved liquidity and positive economic indices which may reverse the current trend.

We see investors focusing on portfolio adjustment and rebalancing by  targeting companies with strong potential to grow their dividend on the strength of their earnings capacity.

Again, the current undervalue state of the market offers investors opportunities to position for the short, medium and long-term, which is why investors should target fundamentally sound, and dividend-paying stocks for possible capital appreciation for the rest of the year.

Meanwhile, the home study packs on Strategies and How to invest profitably in this Changing Market Dynamics/ Recession, Mastering Earnings Season For Profitable Investing and Trading in any market situation/ cycles are available. To obtain your pack send ‘Yes’ or ‘Stock’ to 08028164085, 08032055467, 08111811223 now.

Ambrose Omordionm

CRO|Investdata Consulting Ltd

info@investdataonline.com

info@investdata.com.ng

amberose.o@investdataonline.com

ambroseconsultants@yahoo.com

Tel: 08028164085, 08032055467

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