Market Update for July 25, 2018
Equities trading on the Nigerian Stock Exchange at mid-week closed negative, making it eight months of lower lows on a relatively high traded volume. This is worrisome, coming at the peak of the Q2 earnings reporting season, even as the majority of scorecards have been uninspiring.
The top and bottom lines of these companies alongside their operating cashflow for the first half of 2018 are weak. There is however hope that second half may be better if the expected impact of the 2018 budget implementation are felt, just as there is increased bank lending to the private sector. Other positive factors could include the execution of a single, long-term interest rate to major employers of labour in the real sector as planned by the Central Bank of Nigeria (CBN). It is also expected that the electioneering campaign spending would propel and boost economic activities again. Corporate earnings released so far are not looking too good to reverse the current trend in the market, but will slow down the rate of decline as soon as repositioning of portfolio on the strength of the numbers and bargain hunters taking advantage of low price to buy in.
The happening in the socio-political environment and the slowdown in economic activities have been of serious concerns for investors, despite the seeming positive economic data emanating from NBS and CBN.
Anywhere in the world today, it is Investor confidence that drive economic growth, and the confidence comes through government reform policies, stable political environment and security of lives and properties. All of these aresignificantly missing in Nigeria today.
The continued volatility of the market on a downtrend calls for serious caution by short and long-term investors, considering the current low prices, to avoid “value trap.” This is especially true at this time that company scorecards are being released to the market and showing their current state and the health and wellbeing of the companies.
The day’s market statistics indicated that advance-declines and up/down volume were mostly negative all day. The session opened on a little gap down in the morning which later extended till midday and afternoon, touching intraday lows of 36,339.41 from highs of 36,474.12 to consolidate the previous day’s position as it finally finished the day at 36,346.80.
Mid-week market technicals were negative and mixed as volume traded was relatively high in the midst of negative market breadth and sentiments as revealed by Investdata’s Daily Sentiment Report, showing a ‘sell’ pressure of 95% and ‘buy’ volume at 5%. Volume index was 1.07 of the day’s total transactions.
The momentum behind the market performance for day was further weakened, as reflected in the money flow index at 15.75 points, a huge drop from previous day’s 27.49points. This is an indication that funds are exiting the market at the close of business, despite the earnings season being at its peak.
Index and Market Cap
The NSE’s benchmark index at the end of the session shed 108.44 basis points, closing at 36,346.80bps, after opening at 36,455.24bps, representing a 0.30% decline. Market capitalization, was down by N39.28tr to close at N13.17tr from an opening value of N13.21tr, also representing 0.30% value depreciation to further worsen investors’ loss position.
If you haven’t joined Investdata Buy & Sell Signal setup, where you can look over our shoulder and follow to know when to hold cash and take advantage of the watchlist of stocks for different investment purposes that you may position in, as the market oscillate. To register and become a member send Yes or stocks to the phones numbers below. The number of stocks on our watch list has increased due to the prolonged correction. Take advantage of this service to buy right and sell right.
The day’s downturn resulted from mixed numbers, political tension and low liquidity as medium and high cap stocks shed value. They include: Nigerian Breweries, Guaranty Trust Bank, Lafarge Africa, Forte Oil, ETI,Oando, Dangote Sugar, Dangote Flour, Flourmills, UBN, Cadbury, Stanbic IBTC, Oando, and Jappaul Oil. This impacted negatively on the NSE’s Year-to-Date return, deepening its negative position to 4.96%. This was just as market capitalization within the period lost N421.34bn, same as 3.07% below the year’s opening value.
Bearish Sector Performance
Sectorial bearish performance continued at the midweek trading seasion, except for the NSE Banking that closed higher at 0.10%, while NSE Insurance, consumer goods, industrial goods, oil and gas were lower. Market breadth was negative as decliners outweighed advancers in the ratio of 29:15, to halt the two day up market.
Market activities were down in volume and value by 12.9% and 17.5% respectively to 329.9m shares worth N3.65bn, from the previous day’s 378.7m units valued at N4.42bn.
Transactions for the day were boosted by trading in financial services stocks, FBNH, UBA, Access Bank, Zenith Bank and Diamond Bank that witnessed increased trading to top the activity chart.
Caverton and Champion Breweries were the best performing stocks for the day, topping the advancers’ table after gaining 10% each to close at same N2.09, due to impressive Q2 numbers and market forces.
On the flip side, Livestock Feeds and Japaul Oil were the worst, losing 10% and 9.7% respectively to close at N0.63 and N0.28 on market forces.
Market Outlook
With more Q2 earnings reports expected in the market today, it is the state of these numbers that will determine direction as more disappointing reports will drive the market further down or reversal if numbers beat expectation, considering the undervalued nature of equities and the high yields. Investors should review their positions in line with investment goals and act as events unfold 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 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 fundamental.
Investdata Stock Market Training Workshop
The Date: On Saturday, July 28, 2018, Venue Ostra Hall & Hotel Alausa Ikeja Opposite NNPC Gas Plant
Theme: Comprehensive Stock Trading & Investing Toolkit for Rest of 2018
Sub Topics
Review of 2018H1 Market & Economic Performance: How Fiscal Reforms and Stimulus Will Support the Market/Economy in 2018H2
In this presentation, the speaker will discuss how historically the Fiscal and Monetary policies have influenced Nigeria’s stock market, the implications for the second half and it would drive equity prices higher as recovery continues, impact of the new NSE market Structure.
2018H2 Trading Checklist: How to Find Winning Stocks in Nigeria’s Volatile Equity Market
After the prolonged correction, volatility is here to stay for the rest of 2018. Is it time to start worrying about losses suffered so far, a flattening yield curve or time to relax due to the outstanding earnings season? Better yet, is there a way to harness increased volatility to your advantage? Our facilitator, a stock market expert will show you how to handle increased volatility in 2018. He’ll offer insights into forces impacting today’s market. He will share, using real-time examples, his ultimate checklist to finding winning stocks propelled by volatility. This simple strategy allows you to quickly evaluate stocks and to better time entry and exit points, while understanding market forces moving your portfolio.
How To Generate Consistent Superior Equity Returns and Income With Dividend Stocks
Here, the expert will discuss his approach to generating equity income by investing in undervalued dividend stocks, what he looks out for when trading dividend stocks at a discount to historical valuations on multiples of price to sales, earnings, cash flow, book value, and enterprise value to EBITDA. In addition, he requires companies to have positive operating cash flow over the past 12 months, with dividends covered comfortably by cash flow.
Powerful Patterns and Effective Strategies for Trading Shifts in Market Volatility
Recent and ongoing changes in market volatility present both risks and opportunities for discerning traders. Learn some of the most effective strategies for taking advantage of the high-probability trading opportunities available in equities, while minimizing risks associated with stock market trading. The six most powerful patterns in the market to trade, how to know which patterns and strategies to specialize in for consistent results and the critical difference between oscillating and momentum patterns.
Kindly call or send yes to 08032055467, 08028164086 or 08111811223.
Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467
