Market Update for October 30, 2018
As expected, it was yet another very volatile Tuesday on the Nigerian Stock Exchange (NSE) as market indices closed lower to halt three consecutive days of uptrend in the midst of last hour filing of third quarter reports. As usual also, the results came with mixed in performance, with highly priced stocks like Nestle (READ) and Seplat (READ) announced interim dividends of N20 and $0.05 respectively for their shareholders.
Numbers from Oil/Gas stocks like Oando (READ), so far, look impressive except for Eterna that recorded mixed numbers, judging from their top and bottom lines. Earnings reports from consumer goods stocks came below market expectation, except for Nestle Nigeria, which was saved by internal cost control and consumer loyalty. Also, numbers from service industry were mixed, except for Newrest ASL, which posted impressive numbers to reveal a robust operation, which will likely support price, going forward.
The benchmark NSE All-Share index started the day trading on a gap down, in the morning session on the impact of profit taking, before retracing between midday to afternoon, after touching intra-day lows of 32,828.11 basis points. It got back up to breakout the recent key resistance level at 33,269.23bps, testing a high of 33,577.11bps before pulling back in the last minutes to 33,167.88bps as traders cashed out their profit. The NSE index failed to consolidate after the seeming breakout, but yielded to tribble tops reversal for the day.
Tuesday’s market technicals were negative and mixed as volume traded was high amidst negative market breadth and mixed sentiment, as revealed by Investdata’s Daily Sentiment Report, showing a sell volume of 55% and buy position of 45%. The volume index for the day’s total transactions was 1.37.
Momentum behind the day’s market performance was further strengthened as more companies rushed to release their numbers ahead of Wednesday’s deadline. The day’s money flow index moved higher at 69.12bps, despite selloffs from previous day’s 67.49bps, an indication that funds are entering some stocks amidst month-end, and earnings season rebalancing.
Index and Market Cap
At the end of Tuesday’s session, the composite NSE index shed a marginal 28.19bps to close at 33,167.88bps, after opening at 33.196.07bps, representing 0.08% decline. Similarly, market capitalization lost N10.29bn, closing at N12.11tr, from an opening value of N12.12tr, representing a 0.08% dip.
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The downturn was impacted by selloffs in medium and high cap stocks like: Seplat, Guaranty Trust Bank, Zenith Bank, UBA, FBNH, Unilever, Wapco, Oando, International Brewery, Dangote Flour, Dangote Sugar, ETI and Honeywell. This impacted negatively on the Year-to-Date returns, to 13.27%, while market capitalization notched to N1.5tr, representing 11.06% drop, from the opening value.
Bearish Sectors Indices
Sectorial index performances were largely bearish, except for the NSE Industrial Goods that closed marginally higher by 0.02%, while others were down due to profit taking. Market breadth was negative, as decliners outnumbered advancers in the ratio of 24:17, to halt the three-day bullish run.
Market activities were up in volume and value by 105.41% and 108.36% respectively at 309.16m shares worth N5.99bn from the previous 160.50m units valued at N2.88bn, boosted by trading in financial services stocks like: Guaranty Trust Bank, Sterling Bank, FCMB, Custodian Investment and FBNH.
Presco and Stanbic IBTC were the best performing stocks, gaining 9.43% and 7.14% respectively to close at N58 and N52.50 per share, on market forces and impressive earnings. On the flip side, Meyer and Dongote Flour lost 9.68% and 9.52% each to close at N0.56 and N6.65 each on market forces and profit taking.
Market Outlook
Expect repositioning and short term profit taking to continue as more companies present their numbers, amidst increased volatility, if the numbers beat market and analysts forecast.
The ongoing Q3 earnings reports would assist investors and fund managers rebalance their portfolios, while watching the political space and analysing the actual numbers that will give insights into expectations for Q3 GDP and full year company earnings power. These are likely to drive prices north, or south, while determining market direction before or after Presidential Election.
Investors should review their positions in line with investment goals, strength of the company numbers 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,
We advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst mixed company, economic and market fundamental.
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CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467
