Expected March Accounts May Spike Buying Interest As Volatility May Linger

Market Update for June 27, 2018

 Nigeria’s equity market at the midweek continued its volatility and side-ways movement, impacted by losses recorded by stocks across board, following which the benchmark index closed marginally lower in the face of mixed feelings as crude oil price remains above $70, while economic activities continue to slow down, despite the Presidential assent to the 2018 budget.

There is also the prevailing wait-and-see attitude among the investing public, despite impressive earnings reports from Challrams and Tripple Gee to kick-off the inflow of March year-end accounts ahead of the statutory deadline on Friday, June 29, 2018 being the last working day of the month.

The 3 kobo dividend by Tripple Gee should give insight into what the remaining companies like Honeywell, Flour Mills, University Press and Redstar Express will do, notwithstanding the fact that these companies are not in the same sector/industry.

The NSE index opened the day’s trading session on the downside that lasted till midday on oscillating moves, touching intraday lows of 37,908.64 basis points, from the highs of 38,030.63 that had become the recent resistance level which needs a breakout to confirm a new trend.  Investors and traders, in the last two earnings reporting seasons, have not react positively to the released numbers due to continued sell-offs and profit booking after the 2017 full-year and January 2018 impressive stock market rally.

However, it is expected that market liquidity would receive a boost, with the expected improved performance in Q2 numbers, low valuation, implementation of the new pension classification funding and the NSE’s new market structure. These are also expected to impact the nation’s stock movement favorably.

Market technicals for Wednesday were negative and mixed, with traded volume relatively in the midst of negative market breadth and mixed sentiments, as revealed by Investdata’s Daily Sentiment Report showing a ‘sell’ pressure of 55% and ‘buy’ volume of 45% on a volume index of 1.14 of the day’s total transactions.

The driving force behind the midweek market performance were low despite the mixed sentiment, reflecting on the money flow index at 31.17 points from the previous day’s 38.39 points. This is an indication that funds left the market at the close of business for the day, despite the activities of bargain hunters who continue to position ahead of the earnings season and implementation of new pension assets classification funding that will support long term stability.

Index and Market Cap                                      

The All Share index at the end of Wednesday shed 24.61bps, closing at 37,963.93bps, after opening at 37,988.53bps, representing a 0.06% decline on a relatively low volume that was lower than the previous day’s. Similarly, market capitalisation was down by N8.91bn to close N13.75tr from an opening value of N13.76tr, representing 0.06% value loss.

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Midweek’s downturn was due to losses suffered by low, medium and high cap stocks like Nigerian Breweries, Seplat, Guaranty Trust Bank, Zenith Bank, Oando, 11 Plc, Diamond Bank, Cadbury, Fidelity Bank, Honeywell and Japaul Oil. These impacted negatively on the NSE’s Year-to-Date return, pushing it further down to 0.73%, while in market capitalisation gain for the period stood at N88.33bn, a 0.90% rise above the year’s opening value, on the impact of new listings earlier in the year.

Mixed Sector Performance

Sectorial performance for the day were bearish, except for the NSE Oil/Gas and Industrial that was up while the NSE Insurance, Banking and Consumer goods were down marginally. Market breadth turned negative as decliners outnumbered advancers in the ratio of 32:12 to keep the market on its second day of side range movement.

Market activities were down in volume and value by 31.02% and 32.51% respectively to 372.24m shares worth N3.18bn from the previous day’s 538.64m units valued at N4.71bn. The day’s volume was boosted by trading in financial services and conglomerates goods stocks like Sterling Bank, Zenith Bank, Transcorp, UCAP and UBA that witnessed increased trading to top the activity chart.

Best performing stocks for the day, were C & I Leasing and Unity Bank that topped the advancers’ table, with 4.66% and 4.49% respectively to close at N2.02 and N0.98 each, due to market sentiments

On the flip side, Japaul Oil and Eterna were the worst performing, losing 7.32% and 5.04% each to close at N0.38 and N6.41 on profit taking and market forces.

Market Outlook

We expect improved buying interest if more impressive March accounts earnings reports hit the market today. 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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Sub Topics

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Ambrose Omordion

CRO|Investdata Consulting Ltd





Tel: 08028164085, 08032055467