Equities

High Volumes, Despite Down Market Signals Hope, As Investors Position For Q2 Earnings

Market Update for June 19
Trading on the Nigerian Stock Exchange (NSE) again closed lower at the midweek, to further consolidate the three consecutive sessions of losses which had extended the 5-wave decline that took the performance index into intraday low.
The recent huge volumes traded in some stocks during this prolonged down market signals there is hope for the nation’s equity market, despite the seemingly hopeless situation with the persisting selloff in highly capitalized stocks on the exchange.
We must, however, note that a nation with pension assets in excess of N9.1tr should not be witnessing such market decline as this since 2018. The story of weak economic fundamentals is not also new, following which we believe that if the government and its policymakers had done the needful at different level things would today be different. Other factors threatening economic activities and investment are the rising insecurity, made worse by the fact that the government has not demonstrated the capacity and commitment to charting a new course for the economy.
The day’s trading started with the indices looking up marginally before pulling back in the mid-morning, a situation that was maintained throughout the session as high cap stocks suffered value loses. The benchmark NSE All-Sharindextouched intraday low of 29,772.72 basis points from its high of 29,891.86bps, to finish the session lower bps on negative sentiment.
Market technicals were negative and mixed as volume traded was lower than the previous day’s, amidst of positive breadth and high selling pressure as revealed byInvestdata’s Daily Sentiment Report showing a ‘sell’ volume of 100% and ‘buy’ position was 0% of the total daily transaction volume index of 0.59.
The day’s volume was driven by the 970.17m shares of Forte Oil traded in off-market deals for N66.25bn (READ MORE).
The momentum behind the day’s performance was weak and flat, as Money Flow Index read 12.04points, from previous day’s 11.98bps, indicating funds are leaving the market and some stocks in the midst of prevailing low liquidity.

Index and Market Cap
The NSEASI, at the end of the day’s trading, lost a marginal 46.08bps, closing at 29,772.72bps, after opening at 29.818.83bps representing 0.15% decline. Just as markets capitalization lost N20.3bn to close at N13.12tr, from its opening value of N13.14tr, which represented 0.15% value loss.
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The day’s downturn was driven by a selloff in Seplat, Dangote Cement, Nestle, MTNN, Zenith Bank, Stanbic IBTC, Unilever and FCMB, impacting negatively on the Year-to-Date loss position which increased to 5.27%. Market capitalisation gain also dropped to N1.28 trillion, or 13.28%, from the year’s opening level of N11.72tr.

Bearish Sector Indices
All sectoral indices were in red, except for the NSE Banking which closed in green by 1.32%, while the NSE industrial led the decliners after losing 0.83%. It was followed by Oil/Gas with 0.65%, next were consumer goods and insurance with 0.41% and 0.30% respectively.
Market breadth was positive as advancers outnumbered decliners in the ratio of 21:19, just as market activities were mixed as volume traded dropped by 57.73% to 1.23bn shares from the previous day 2.91bn units, while value was up by 505.80% to N67.89bn from N11.22bn.Volume was driven by financial services, oil and ICT stocks like Forte Oil, Prestige Assurance, Etranzact, Guaranty Trust Bank and FBNH.
Forte Oil and NEM Insurance were the best-performing stocks for the day, topping the advancers’ table with 10% each close at N34.65 and N2.45 per share respectively. investors should be exercise caution, asOtedola’s exited forte oil and market forces respectively. On the flip side, Consolidated Hallmark Insurance and Presco lost 9.09% each to close at N0.22 and N50.00 respectively on market forces and profit booking.

Market Outlook
The bearish trend and mixed performance may slow-down on a positive statement or move by the government on the economy and expected to reposition by bargain hunters at this current low stock prices in anticipation of March year-end earnings reports and second half interim dividend.
Investors may also take into consideration the expected economic reforms as the new cabinet are expected on board as Central Bank of Nigeria (CBN) had started rolling out plans and guidelines on how to lend to the private sector to boost economic activities and investment in different industries.
Investors look to government’s policy direction as the market faced low liquidity problems in pre and post-inauguration season, vis-à-vis market and economic fundamentals.
The drop in prices of major blue chips in recent times has created entry opportunities, following which we expect speculative trading to shape the market direction going forward.
We advise investors to allow numbers to guide their decisions while repositioning in any stock, especially now that stock prices remain low in the midst of mixed company numbers, weak economic and market fundamentals.

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Ambrose Omordion
CRO|Investdata Consulting Ltd

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Tel: 08028164085, 08032055467

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