Market Update for January 20
Trading activities on the Nigerian Stock Exchange NSE), on Monday, was volatile and mixed, extending the recovery moves of the market as composite All-Share index closed higher on a low traded volume, a sign that traders and investors are cautious ahead of the two-day Monetary Policy Committee (MPC) meeting beginning on Thursday. There is also the continued profit booking as reflected in the losing momentum before the three days of the uptrend.
At the end of Monday’s trading session, the market’s benchmark index formed a double top that supports a pullback, depending on market forces. We expect that a breakout of this resistance level of 29,812.64 basis points will usher in a markup phase that will be a function of the MPC meeting’s outcome, not forgetting the impact of the expected corporate earnings.
The rise in the notification about insider dealings in listed stocks is a welcome development as it promotes transparency while guiding investment decisions.
Meanwhile, Monday’s trading started on the upside in the morning and oscillated for the rest of the day on mixed sentiment as the NSEASI touched intraday high of 29,713.84 basis points from its low of 29,545.93bps, before closing the session higher at 29,710.56bps on positive market breadth.
Monday’s market technicals were positive and mixed, with volume traded lower than the previous sessions, in the midst of positive market breadth and strong buying pressure, as revealed by Investdata’s Sentiment Report of 98% ‘buy’ position and 2% ‘sell’ volume. The day’s total transaction volume index stood at 0.81, just as the energy behind the day’s performance remained strong but slightly down, even as Money Flow Index read 78.86points, from the previous 79.12ps. This is an indication that funds left some stocks by way of profit-taking despite the upmarket.
Index and Market Caps
At the close of trading on Monday, the benchmark index NSEASI, gained 92.04bps, closing at 29,710.56bps from the 29,618.58bps, representing a 0.31% growth, just as market capitalization was up by N47.41bn, closing at N15.3tr from its opening value of N15.26tr, representing a 0.31% value gain.
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The session’s uptrend was impacted by the demand for stocks like MTN Nigeria, Zenith Bank, UBA, Guaranty Trust Bank, Total Nigeria, Lafarge Africa, NASCON, BUA Cement, FBNH, Ecobank Transnational Incorporated, FCMB and Law Union, among others. This impacted positively on the NSE’s Year-to-Date gain, increasing it to 10.69%. Market capitalization, YTD, climbed to N2.35tr, representing an 18.10% growth over the year’s opening value.
Bullish Sector Indices
The sectoral performance indexes were largely bullish, except for the NSE Consumer Goods Index that closed 3.14% lower, while the NSE Industrial Goods index led the advancers, after gaining 1.95%, followed by the Banking, Insurance, and Oil/Gas with 1.16%, 1.10%, and 0.34% respectively.
Market breadth remained positive with advancers outnumbering decliners in the ratio of 22:12, while market activities were mixed as volume traded was down by 17.85% to 266.95m shares from the previous day 324.97m units, while transaction value increased by 17.75% to N4.18bn from Friday position of N3.55 billion. The day’s volume was driven by trades in shares of Access Bank, Zenith Bank, Guaranty Trust Bank, FBNH and UBA.
Law Union & Rock Insurance and Total Nigeria were the best-performing stocks for the day, as they gained 10% and 9.35% respectively to close at N0.55 and N117.00 per share, on market forces and sentiments. On the flip side, NCR and Nestle Nigeria lost 9.88% and 6.12% respectively, closing at N3.65 and N1380.00 on selloffs and profit-taking.
This prevailing intraday mixed trend and performance may continue in the midst of profit taking and positioning by investors taking advantage of the prevailing low valuation, ahead of the MPC meeting, the first in 2020, and the full-year earnings reports of companies. This is also against the backdrop of the prevailing low-interest rate regime in the money market and mixed economic outlook for 2020, at a time the Presidential Economic Advisory Committee is yet to harmonize monetary and fiscal policies and give clear direction.
Also, investors and traders are positioning in anticipation of the 2019 full-year earnings reports, amidst 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.
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08032055467