Low P/E Ratio Keep NGSE Attractive Still, Despite Politico-Economic Hiccups

Market Update for November 14

It was a negative Wednesday session on the Nigerian Stock Exchange (NSE), as previous gains were wiped off on mixed sentiments and relatively above average volume lower than Tuesday’s.
The volatility in the market continued to prolonge the ongoing wave 3 as the NSE All-Share index traded below the shortest moving average of 20, despite resisting further decline to breakdown the strong support level at 31,949.40 basis points. This was due to the activities of bargain hunters who took advantage of low prices and the recent earnings of the companies to speculate.
Trading at the midweek started on the downside, rebounding in the mid-morning to midday, before pulling back by the afternoon on selloffs in blue chip stocks, after touching intraday highs of 32,191.60bps, from a low of 32,101.59bps. It finally closed the day at 32,108.92bps, which was below the session’s opening level.
As we come closer to next year’s general elections, a situation that is making smart money wary by the day, the likelihood of them returning seems high, considering the prevailing low Price-to-Earnings ratio, ahead of year-end rally. This is when many institutional investors take advantage of low prices to play short in the market, considering the high possibility that many companies will grow their dividend.
Midweek market technicals were negative and mixed amidst the low volume traded; positive market breadth and high sell pressure as revealed by Investdata’s Daily Sentiment Report, which shows a sell volume of 64% and 36% buy position. The volume index for the day’s total transactions was 0.96, while energy behind the market performance was stronger, going by the increase in Money flow index to 60.84bps, from previous day’s 58.71ps, indicating that funds are entering some stocks despite the selloffs in some equities.

Index and Market Cap
Wednesday’s benchmark index closed 43.98bps lower, at 32,108.92bps, after opening at 32,153.90bps, representing 0.14% decline, just as market capitalization lost N16.11bn, at N11.72tr from an opening value of N11.74tr, or 0.14% dip.
Attention: Join Investdata buy and sell signal setup to get all our in-depths analysis on the picture and to get access to our carefully created watch list. To become a member, send ‘YES’ or ‘STOCKS’ to the phone numbers below. The number of stocks on our watchlist has increased due to the prolonged market correction. Take advantage of this service to buy right and sell right.
The day’s downturn was impacted by value loss in medium and high cap stocks, impacting Year-to-Date slide, swelling it to 16.04%, while market capitalization decline increased to N1.88tr from its opening level in January, representing 13.84% drop.

Mixed Sectors Indices
Sectorial performance was largely bullish, except for the NSE Banking and Oil/Gas that closed lower. Market breadth was positive with advancers outpacing decliners in the ratio of 16:15.
Market activities were down in volume and value by 42.16% and 44.10% respectively to 229.26m shares worth N1.79bn, from previous day’s 399.76m units valued at N2.24bn.
Transaction volume was boosted by financial services stocks like: FBNH, Diamond Bank, Access Bank Zenith Bank and GTBank
Unity Bank and Honeywell Flourmill were the best performing stocks, leading the advancers’ table, after gaining 9% and 6% respectively to close at N0.85 and N1.06 each on market sentiments.
On the flip side, Diamond Bank and Eterna that lost 9.5% and 9.2% respectively to close at N0.95 and N4.95 each on market forces and profit taking

Market Outlook
With equity prices becoming cheaper, oscillating trend will continue as traders speculate ahead of the release of October inflation report, given that there is no new incentive for the market in November, until there is a change in the narrative. Going by the timetable of the National Bureau of Statistics (NBS) released earlier in the year, the nation’s Q3 Gross Domestic Product (GDP) report is slated for release on Tuesday, November 27, same date as the Q3 capital importation report.
The ongoing volatility will persist as Q3 numbers assist investors and fund managers rebalance their portfolios, while watching the political space and ahead of the expected Q3 GDP and full year company earnings position. 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.

Attention! Attention!! Attention!!!
Invest 2019 Traders & Investors Summit
Theme: Best Returns In 2019 & Beyond: Adopting The Billionaire Mentality In Stock Selection
1. Pre-election year performance Review and post-election Investing opportunities
2. Simple Strategies for picking undervalued stocks With Fundamental & Technical Tools
3. Psychology of Equities Trading For Managing Positions & Money
4. Mastering Market Dynamics & Dividend Techniques To Grow Your Income in 2019
5. Picking the Right Stocks to Retire Rich In Financial Independence
6. Nigeria’s Post Election Economy & 2019 Sectoral Analysis
7. Understanding the big picture of Budget Delay & Its Implication on the Economy/Stock Market

Investdata Consulting Ltd presents The 8th edition of its TRADERS & INVESTORS SUCCESS SUMMIT tagged: INVEST 2019, designed to be the biggest yearly workshop for stock market traders &investors in Nigeria.

Theme: Adopting The Billionaire’s Mentality In Stock Selection.
Venue: Ostra Hotel & Hall, Alausa, Opposite NNPC Gas-Plant Ikeja Lagos.
Date: Saturday, December 8, 2018.
Time: 10a.m.

The huge decline in stocks from its January 2018 peak has not necessarily been due to the fundamentals of quoted companies, but investors flight for safety over uncertainties arising from next year’s general elections, participants will learn from experts/facilitators at the workshop, how and where to position for juiciest returns, depending on investment horizon.
Previous editions have attracted participants from diverse class of investors and traders, as well as several world-class professionals and experts as speakers and facilitators, including representatives of quoted companies and stockbroking firms. The event has helped market players to effectively time opportunities for higher returns in the New Year.
In today’s equity market, there is wisdom in being able to identify ‘buy’ opportunities very early and sell for maximum returns, while minimizing loss in any market situation.Understanding the dynamics of the stock market during any cycle is the very key to successful trading and investing. For this to happen,we must arm ourselves with knowing the essential driving forces behind the market as they move up and down.
At the INVEST 2019 TRADERS & INVESTORS SUCCESS SUMMIT (TISS) you will discover some seldom considered aspects of investing and trading that can help you bag more big winners, while ratcheting down the number of losers in 2019 and beyond.
This summit will provide answers to these six crucial questions AND others

• What exactly is it we are trying to do as traders & investors?
• What occurs every post-election year that we wish to take advantage of?
• What are the prevailing market moves and who are the dominant players?
• What is ‘smart money’ doing?
• Where should we look to enter the market or exit?
• Is it the same every day, season and year?

When you answer these important (and frequently overlooked) questions correctly, your trading/investing skills will launch into new levels.
For Registration kindly send YES or REG to 08028164085, 08032055467, and 08111811223 now for details.

Ambrose Omordion
CRO|Investdata Consulting Ltd

Tel: 08028164085, 08032055467