Market Update for January 30
Thursday’s was another volatile and mixed session on the Nigerian Stock Exchange NSE), as the market decline narrative continued unchanged despite the increasing number of companies reporting their Q4 and full-year unaudited earnings reports. Although there has not been any dividend announcement from the December 31 year-end accounts, many investors are understandably worried about the pattern at which company score-cards are being released so far. This is possibly why share prices have not responded to these earnings reports owing to scant, or even a lack of understanding of the present releasing pattern. Added to this is the fact that such announcements are not coming with dividend announcement. Worse still, market sentiments have dropped as funds exit the market as revealed by the money flow index.
The modest decline in the NSE’s benchmark All-Share index on Thursday was against a backdrop of mixed trades among high cap stocks and dividend-paying companies expected to announce their payouts in February. That is, however, if they stick to their regular patterns of filing full-year earnings reports with corporate actions.
Meanwhile, Thursday’s trading started on a gap down and oscillated throughout the day on a mixed sentiment that pushed the NSEASI to an intraday low of 28,893.74 basis points which broke down the psychological line of 29,000bps, from its high of 29,222.83bps. Thereafter, the index rebounded sharply, closing marginally lower at 29,030.93bps on a low traded volume.
Market technicals were negative and mixed, with volume traded higher than the previous session’s, in the midst of negative market breadth and mixed sentiments as revealed by Investdata’s Sentiment Report showing 59% ‘sell’ volume and 41% ‘buy’ position. The day’s total transaction volume index stood at 0.78, while the energy behind the day’s performance remained weak with Money Flow Index reading 37.83points, from the previous 43.91ps, an indication that funds exited the market and some stocks.

Index and Market Caps
At the end of Thursday’s trading, the benchmark index shed a marginal 79.97bps, closing at 29,030.93bps from an opening figure of 29,110.90bps which represented 0.27% drop, just as market capitalization lost N41.19bn, closing at N14.95tr, from an opening value of N14.99tr, representing a 0.27% value loss.
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The day’s decline was impacted by profit-taking and selloffs in Lafarge Africa, UACN, UBA, Access Bank, Oando, Transcorp, AXA Mansard, and Honeywell Flour, among others, which impacted negatively on the NSE’s year-to-date gain, reducing it to 8.15%. Market capitalization, YTD, dropped to N2.0tr, representing a 15.45% growth over the year’s opening value.

Mixed Sector Indices
The sectoral performance indexes were bearish, except for the NSE Insurance and Banking Indexes that closed 2.11% and 0.55% higher respectively, while the NSE Industrial Goods index led the decliners, after losing 2.11%, followed by the Oil/Gas and Consumer Goods with 0.50% and 0.04%, respectively.
Market breadth remained negative as decliners outnumbered advancers in the ratio of 21:10, while market activities in terms of volume and value increased by 13.1% and 98.1% respectively to 274.47m shares worth N9.1bn, from the previous day’s 242.76m units valued at N4.59bn. Volume was driven by transactions in Guaranty Trust Bank, MTNN, UBA, Zenith Bank and Unilever.
Cornerstone Insurance and NEM Insurance were the best-performing stocks, gaining 9.26% and 9.09% respectively to close at N0.59 and N2.40 per share, on market forces and earnings expectations. On the flip side, UACN and Union Diagnostics lost 10% and 9.09% respectively, closing at N9.00 and N0.20 owing to profit-taking and market forces.

Market Outlook
We expect the mixed trend to continue in the midst of profit-taking and positioning by investors taking advantage of the pullbacks, as the impact of last week’s CRR adjustment, slows down ahead of the full-year earnings reporting season. This is also against the backdrop of the fact that the capital wave in the financial market may change in the midst of the unstable economic outlook for 2020.
Also, investors and traders are positioning in anticipation of the 2019 full-year earnings reports, amidst the changing sentiments in the hope of improved liquidity and positive economic indices which had pushed the market out of the bearish zone.
We see investors focusing on the upcoming full-year earnings season, targeting companies with strong potential to grow their dividend on the strength of their earnings capacity.
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 New Year.
This was noted in the 10 golden stocks and trading ideas for 2020, as discussed extensively during the Investdata 2020 Traders & Investors Summit held in Lagos last December.
Also, traders and investors need to change their strategies, because of the NSE’s pricing methodology, the CBN directives and their impact on the economy in the nearest future.
Meanwhile, the Investdata team welcomes you to a bullish 2020. The home study packs of Invest 2020 Opportunities and Trade Ideas Summit containing the 10 Golden Stocks for 2020 are available. To obtain your pack send ‘Yes’ or ‘Stock’ to 08028164085, 08032055467, 08111811223 now.

Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
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Tel: 08028164085, 08032055467