Investors Await Onset Of Q1 Earnings Season

Market Update for April 12

The stock market yesterday was erratic as the indices started the day out on the downside but retraced up towards the end of the trading session to halt the losing streak, as major banking stocks heaved a sigh of relief with investors and traders looking their way in expectation of better Q1 results going by their latest performance. The dominant sentiment across the market remains that factors propelling such numbers were still intact, not minding that the economic recession has not been officially declared ended, especially now that the high inflation that led in part to the bloated level of non-performing loans ratio to 14% is gradually looking down. Added to this is the ongoing efforts by the Central Bank of Nigeria (CBN) to ease the supply of US$ to manufacturers and SMEs, among others.
The ongoing repositioning for earnings trading by smart money and other players have increased the demand for stocks as revealed by volume index of 1.03, with buying position of 76% and selling volume of 24% of the day’s total volume traded.
Despite the recent rally in oil price, global stock markets have remained unstable as many have underperformed over and investors are becoming more cautious and running for safety, amidst unexpected socio-economic and political factors now unfolding across the global. The recent double tops formation of global equity indices, including oil and Eurodollar is a concern for investors as the fear of a face-off between North Korea and Donald Trump administration may complicate issues.
Meanwhile, the composite NSE All Share Index gained 18.65 basis points to close at 25,496.71 from an opening figure of 25,478.06, representing a marginal growth of 0.07% on average volume traded, but lower when compared to the previous day’s volume.
Similarly, market capitalisation for the day looked up slightly by N6.45bn to close at N8.82tr, from an opening value of N8.82tr which is almost flat but represented 0.07% growth in investors’ portfolios.
Value appreciation in Zenith Bank, Guaranty Trust Bank, UBA, FBNH, Nigerian Breweries, Flourmills and Oando impacted the benchmark index to marginally reduce year-to-date negative position to 5.12%, while market capitalisation adjusted to N421.67bn, representing a 4.71% loss YTD, from the year’s opening value.
Market breadth for the day was positive but weak as the number of advancers outweighed decliners in the ratio of 18:17 to halt three trading sessions of bear transition.
Market activity in volume and value were down by 38.49% and 34.90% respectively to 247.68m shares from previous day’s 402.68 million shares and to N1.25bn from the previous day’s N1.92bn. The volume of transaction was driven by shares of Fidelity Bank, FCMB Holdings, Access Bank, Transcorp and Hallmark Consolidated Insurance as most traded equities.
The NSE All-Share index and all sectoral indices were mixed to close the day’s trading. Transcorp notified the exchange of its closed period for the expected first quarter earnings report.
At the end of the day’s trading, Transnationwide Express led the advancers table with 4.6% to close at N0.91, driven by market forces; followed by Fidson Healthcare’s 3% to close at N0.97; while Unilever Nigeria topped the decliners’ table, shedding 5% of its opening value to close at N33.25, next on the table, Lafarge Africa dropped 4.99% to close at N45.13.
As market open this morning, we advise that investors allow numbers to guide their decisions to reposition for Q2 trading as the first quarter earnings reporting season is just kicking off. Industry potential is very important when picking a particular company, because there are things that are sector-wide and would naturally impact positively or negatively on companies operating within such an industry.