Market Update for February 27
Stocks on the Nigerian Stock Exchange (NSE) closed lower at the midweek as negative sentiment extended into the second trading session on a high selling volume and declining money flow index. The index reveals the direction of smart money and institutional players at any given time.
Trading opened on the downside in the morning, a situation that was sustained throughout; on day when umpire, the Independent National Electoral Commission (INEC) declared incumbent President Muhammadu Buhari of the ruling All Progressives Congress (APC) winner of the presidential poll. Buhari, according to INEC, defeated his closest rival- Atiku Abubakar of the Peoples Democratic Party (PDP) and was handed the certificate of return.
The seeming flight for safety impacted the NSE All-Share index negatively as it it touched intraday lows of 32,185.34 basis point, from highs of 32,521.74bps, before retracing up slightly, finishing the day at 32,244.24bps amidst selling pressure.
Liquidity remains a key fundamental driving equity prices and impacting market performance, just as its flow is very important, because it tells where the general market direction. The increasing volume of transactions with MFI looking down, signals exit of funds from the market.
The Presidential election outcome has in one way or the other triggered this pullback having deviated from what smart money and other players expected, especially as the slant of the incumbent government is already well known.
Analysts and market players have also expressed disappointment that the Buhari government refused to appoint a board for an important institution as the apex regulator of the capital market- the Securities & Exchange Commission (SEC) over the last four years. The commission, whose newly inaugurated board by the Goodluck Jonathan government was dissolved with no replacement. This means that over the four-year term of the Buhari administration so far, the SEC has been run Finance Minister, thereby slowing down a lot of developments and innovations in Nigeria’s investment environment.
As we mentioned in the market update of Tuesday, February 26, 2019, the ongoing pullback may not last as the return of certainty and relative peace onto the polity may attract foreign investors, lured by the nation high interest rate environment. This does not however reduce the expected impact of the ongoing earnings reporting season.
So far, more companies have released more impressive full-year numbers, offering better dividend payout. One of them is the impressive full year earnings report of Dangote Cement, the most capitalized stock on the NSE (READ HERE). The board has recommended a dividend per share of N16, as against N10.50 each paid in the previous year. This is likely to support the market, in addition to earlier released numbers, thereby reducing the losing momentum or turn positive depending market forces.
Midweek market technicals were negative and mixed as volume traded were higher than previous session in the midst of negative breadth and high selling pressure. This was revealed by Investdata’s Daily Sentiment Report, showing a sell position of 82% and buy volume of 18% on a daily transaction volume index for the day at 1.25.
The energy behind the day’s market performance was down, reflecting the sell market as shown by money flow index at 79.51points, down from previous day’s 87bps, indicating that funds are leaving some stocks.

Index and Market Cap
NSE All Share index at the end of session shed 229.58bps, closing at 32,244.24ps, after opening at 32,473.82bps, representing a 0.71% decline. Market capitalization lost N86bn to close at N12.02tr, from the opening value of N12.11tr, representing a 0.71% value loss.
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Wednesday’s downturn was due to profit taking in medium and high cap stocks like: Nestle, Zenith Bank, UBA, FBNH, Oando, and Dangote Sugar, among others. This impacted negatively on Year-to-Date gains which contracted to 2.59%, while market capitalization gain dropped to N214.39bn, from the year’s opening level of N11.72tr, representing a 2.59% growth.

Bearish Sectoral Indices
All sectoral performance indices were largely bearish, except for NSE Insurance that closed 0.08% green. Market breadth was negative as decliners outnumbered advance in the ratio of 29:10.
Market activity involume and value were up by 41.56% and 10.07% respectively to 456.67m shares worth N2.68bn, as against the previous day’s 322.18m units valued at N2.46bn, driven by financial services and conglomerates stocks like: Diamond Bank, Fidelity Bank, Access Bank, Transcorp and UBA.
Neimeth Pharmaceuticals and PZ Cussons were the best performing stocks, chalking 9.8% and 9.4% respectively to close at N0.67 and N13.45 per share on low price and market forces. The flipside was led by Union Diagnostic and Oando , which shed 9.79%% and 9.7% respectively to close at N0.28 and N6.55 each, on profit taking.

Market Outlook
We expect the losing momentum to slow down on Dangote Cement impressive numbers and more earnings reports. This will expectedly have positive influence on the market if the numbers and rewards beat expectations, despite profit taking and volatility that will continue. Investors and traders also should continue their repositioning for the 2019 dividend declaration season and post-election rally expected to shape market performance in the interim. We advise cautious trading and investingwhile positioning in fundamentally sound equities.
Volatility will also continue as investors and fund managers reposition their portfolios, with eyes fixed on earnings reports, but investors should review their positions in line with their 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 low in the midst of mixed company numbers, weak economic and market fundamentals

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Ambrose Omordion
CRO|Investdata Consulting Ltd
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