Low Equity Prices Lure Investors, Amidst Lingering Volatility, Portfolio Rebalancing

Market Update for June 4, 2018

The nation’s stock market on Monday had a positive session after 11 days of bearish run, as investor sentiment strengthened due to low valuations among the medium and high cap stocks that attracted bargain hunters to reposition ahead of first half earnings reporting season. Added to this is the expectation of March year-end results likely to positively influence equities due to low prices already and the impressive intrinsic values of most companies on the bourse.
We however look forward to some recovery after the prolonged bear run, despite the political risks associated with the 2019 general elections, amid hopes that Nigeria’s economy will remain stable, helped by the possibility that President Muhammadu Buhari will give assent to the 2018 Budget in the coming days.
At the end of Monday’s trading, market breadth was flat, an indication that stocks are resisting further decline, even as the Naira remained relatively stable and crude oil price is rising as the U.S 10-year treasury yield remain unstable. We expect the selling pressure on the market to reduce in order support the seeming rebound.

NSE Daily Time Frame
Although the day’s underlying technicals were not too strong, but it was positive enough to close the session up.
The NSE composite All-Share index started out with big gap-down at the opening, which lingered till the mid-morning before retracing up at midday when it hit intraday highs of 36,950.98 basis points from a low of 36,676.15bps, before it finally rallied to close at 36,947.10bps. The day’s buying pressure was high at 99%, while selling volume was 1% on a volume index of 1.00 of the day’s total transactions.
The day’s buying interest did not reflect in the money flow index which remained at Friday’s 6.01 points, an indication that market liquidity is too low and weak to drive prices until more funds start entering by way of demand for more equities.
The market is still waiting for a major news or fiscal stimulus to trigger new positioning as stocks remained undervalued, especially among banking, consumer goods and industrial stocks that had suffered most in the recent downturn.

Index and Market Cap
The benchmark index recorded a gain of 134,69 bps to close at 36,947.10 bps, after opening at 36,816.29 bps, representing a 0.37% growth on a relative low volume that was lower than the previous day’s. Similarly, market capitalisation went up by N47.38bn to close at N13.38tr from an opening value of N13.34tr, also representing 0.37% value gain which reduced investors’ loss. Recall that the market broke down the 37,000 psychological line last week as it tries to form a support level at 36,676.15bps, depending on market forces as trading opens today.
If you are hunting for the right stocks to buy on this dip, join Investdata buy & sell signal setup. We have a watch list of many stocks for different investment purposes that you may position in as the market searches for support level to kickstart recovery. To register and become a member send Yes or stocks to the phones numbers below. Our watch list has increased due to the lingering bear transition, take advantage of this service to buy right and sell right.
Monday’s upturn was due to fresh buying interests in medium and high cap stocks like NB, Guaranty Trust Bank, Zenith Bank, FBNH, Fidelity Bank, Dangote Flour, Oando, Forte Oil, 11 Plc, ETI, and Total Nigeria. These impacted positively, reducing the NSE’s Year-to-Date loss to 3.39%; while market capitalisation decline for the period stands at N226.12 billion, of 1.66% below the year’s opening value.

Mixed Sector Performance
The sectorial performance across broad were mixed as NSE Banking and Oil/Gas closed to the north, helped by GTBank, Zenith Bank, FBNH, Forte Oil, 11 Plc and Eterna recorded value gain for the day in the same direction with the general market. The NSE Industrial goods index, consumer and Insurance were however down.
Market breadth was at equilibrium as decliners equaled advancers in the ratio of 21:21 to halt 11 days of bear transition.
Market activities were down in volume and value by 39.16% and 2.36% respectively to 314.44m shares worth N7.03 billion from the previous day’s 516.83 million units valued at N7.20 billion. Transaction volume was boosted by financial services stocks like Guaranty Trust Bank, Sovereign Trust Insurance, FBNH, Diamond Bank and Zenith Bank which witnessed increased trading to top the activity chart.
Japaul Oil and Custodian Allied were the best performing stocks that topped the advancers’ table, gaining 9.1% and 4.9% respectively to close at N0.24 and N5.12 each. This was as a result of market forces and sentiments.
On the flip side, Oando and Cadbury were the worst performing, losing 9.0% and 8.0% respectively to close at N6.10 and N11.50 each on market forces and profit booking.

Market Outlook
We expect buying interests to increase, as traders take advantage of low prices, while volatility continue, with players rebalancing their portfolios ahead of March full-year account, especially as equities become cheaper with higher yields. Investors should review their position in line with their investment goals and take action as events as it unfolds in the global and domestic environment
However, we would like to reiterate that investors should not panic but go for equities with intrinsic value, especially during this season were less earnings are released ahead of march full year earnings release and Q2 interim dividend payment are expected in the market arena very soon.
We advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst improving company, economic and market fundamentals.
It is time to combine fundamentals and technical tools to take decision by knowing the support and resistant level to reposition or exit any position. A stock market is in cycles. You must know the cycle it, or particular stocks therein are to successfully manage your trading and investment risk. For stocks that should be on your shopping list to buy in these seasonal changes as the year unfolds, sign up to INVESTDATA BUY AND SELL signal setup by calling 08032055467.
Get your home study pack of the INVEST 2018 Traders & Investors Summit and ride with the current recovery on Nigeria’s stock market and economy, thereby ensuring that you invest and trade with knowledge. You can also access stocks analysed in the home study pack of the Chart Summit held on February 24, 2018, including the 15 stock-picks for 2018 are available now to guide your positioning as trading for the year.
Comprehensive training materials on stock Trading and Investing for Financial Independence series are Available, you can play and watch on your mobile phone, laptop, desktop and TV set. Kindly call or send yes to 08032055467, 08028164086 or 08111811223.

Ambrose Omordion
CRO| Investdata Consulting Ltd

Tel: 08028164085, 08032055467

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