Market Update for December 10
Equity prices closed lower on Thursday as Treasury Bill rates inched up ahead of November economic data such as the Consumer Price Index expected next Tuesday, December 15, 2020, even as crude oil sustained its recovery, hitting $50.59 per barrel, its peak since March.
However, the Nigerian Stock Exchange’s composite All-Share index closed south again, the fourth decline in a row, on profit taking, portfolio rebalancing and even so measure of panic selloffs. The seeming reversal in TB rates and the ongoing price corrections are not enough to derail the equity market’s recovery, amidst the news of COVID-19 vaccines expected to help propel the market at some point. Already, however, bargain hunters and smart money are taking advantage of the pullbacks to position for higher yields.
The CBN’s special interest-free 90-day Bill introduced last week to boost market liquidity by as much as N4.1trn expected to quicken economic recovery and deepen the financial market, will eventually also trickle down to the equity market.
With many nations trying to fast-track the approval and distribution of COVID-19 vaccines, the positive sentiments and impact on economic recovery are likely to trigger buying interests again, as the NSEASI breaks down its first strong support level of 35,000 and the 20-Day Moving Average.
Notwithstanding the ongoing corrections, Nigeria’s equity market could rally above 20% in 2021. Investdata believes the following sectors would outperform the general market: Banking, Industrial Goods, Healthcare, Agriculture, Oil/Gas and Telecommunication, as the economy continues to bask in the euphoria of various fiscal and monetary policy efforts to reignite recovery, growth and development.
Meanwhile, Thursday’s trading started on the downside, which was sustained for the rest of the session as sellers remained dominant, pushing the NSEASI to an intraday low of 34,501.85 basis points, from its high of 35,021.26bps. Thereafter, the index closed significantly below its opening level at 34, 557.26bps on a high traded volume.
Market technicals were negative and mixed, with volume traded higher than the previous day in the midst of negative breadth and selling pressure as revealed by Investdata’s Sentiments Report showing 15% ‘buy’ volume and 85% ‘sell’ position. Total transaction volume index stood at 1.10 points, just as momentum for the day’s performance was relatively weak with the Money flow index crashing further to 46.36pts, from the previous day’s 48.43pts, an indication that funds left the market amidst profit-taking and panic selling.
Index and Market Caps
At the close of Thursday’s trading, the composite index lost 440.00bps representing a 1.27% decline having opened at 35,021.26bps, just as market capitalization fell by N232.07bn to N18.07tr after opening at N18.3tr, representing 1.27% depreciation in investors’ portfolios.
Attention: If you have not signed up for Investdata buy and sell signal setup, don’t delay. We have just added 20 STOCKS TO WATCH THAT ARE BUILDING NEW BULLISH BASE to our watchlist. These stocks are with double potentials to rally considering their current market prices.
To become a member, send ‘YES’ or ‘STOCKS’ to the phone numbers below. Take advantage of this service to buy right and sell right at the current market recovery ahead of portfolio reshuffling and repositioning as we await an economic reform policy to stimulate and re-track the economy again.
The session recorded a downturn due to selloffs in Lafarge Africa, Zenith Bank, FBNH, Access Bank, Dangote Sugar, Vitafoam, Guinness Nigeria and Fidelity Bank, among others, which impacted negatively on Year-To-Date gains dragging it down to 28.82%. Market capitalization YTD gain equally fell to N5.30tr, representing a 39.68% growth above the opening value.
Bearish Sector Indices
All the sectorial performance indexes were down, led by the NSE Banking which lost 4.14%, followed by the NSE Insurance, Consumer goods, Industrial goods and Oil/Gas that closed lower by 3.72%, 2.91%, 0.74% and 0.68% respectively.
Market breadth remained negative, as decliners outweighed advancers in the ratio of 40:6, while transactions in volume and value terms jumped by 95.68% and 94.15% respectively as investors exchanged 553.95m shares worth N6.64bn, from the previous day’s 283.09m units valued at N3.42bn. Volume was driven by Guaranty Trust Bank, Zenith Bank, Transcorp, Regency Insurance and FBNH.
Okomu Oil and Mutual Benefits Assurance were the best performing stocks, gaining 10% and 9.09% respectively at N88.00 and N0.24 per share on the back of repositioning in defensive stock and market forces. On the flip side, FBN Holdings and Lafarge Africa gave up 10% each of their value, closing at N6.301 and N20.25 per share, also on market forces and panic selling.
Market Outlook
We expect the selloff wave to subside as players interpret the impact of funds rotation and the current dividend yields provided by the pullbacks as bargain hunters take advantage of the situation to reposition. Investors should at this point target solid companies selling at discount in the midst of the ongoing cautious trading, portfolio diversification and profit taking, ahead of economic data and seasonal trends. We note that the market awaits the circular flow of funds to settle in higher yields instruments with a shorter time frame, while waiting to see the impact of the adjustment in CBN policies. Behind this correction lies buy opportunities for discerning traders and investors.
Also important is the fact that technical indicators reveal overbought on the weekly and daily chart, while RSI reads 70 points and above, a situation that supports the likelihood of another correction.
However, the strong and faster recovery may continue, depending on market forces, going forward, as propelled by the quality of Q3 earnings presented, especially by the tier-1 banks, even as analyses of numbers released so far have helped repositioning of investors’ portfolios on the strength of sectoral and company’s performances.
The NSE’s index action and indicators are looking up in the same direction on a very high traded volume and positive buying sentiments.
Again, the current undervalued 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 in the rest of the year.
Meanwhile, the home study packs on INVEST 2021 New Opportunities & New Paths To Profits Summit materials and 10 Golden Stocks for 2021, 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, Life Beyond COVID 19 Investment Opportunities In The Stock Market are now available. To obtain your pack send ‘Yes’ or ‘Stock’ to 08028164085, 08032055467, 08111811223 now.
Ambrose Omordion
CRO|Investdata Consulting Ltd
ambrose.o@investdataonline.com
Tel: 08028164085, 08032055467
