Mixed Performance Ahead, As Investors Position On Low Valuation, March Year-End Earnings

Market Update for June 6
The nation’s equity market resumed trading on a very volatile and negative note on Thursday consolidating four consecutive losing sessions after the two-day public holiday to celebrate the Eid Mubarak, on a strong buying pressure and positive breadth.
The mixed performance during the session resulted from the dwindling investor confidence due to the face-off between the Securities Exchange Commission (SEC) and Oando Plc, coupled with price adjustment in the shares of Dangote Cement and Forte Oil for final and special interim dividend respectively that dragged the market down.
The continued decline in the Nigerian Stock Exchange (NSE) All-Share index has created ‘buy’ opportunities rather than selling, even as all eye are on government to do the needful by urgently appointing economic managers to put in place reform to kick start disbursement of funds now that the 2019 budget has been passed into law.
We note that early implementation of the budget will trigger economic activity that would ensure help the country avoid sliding into another recession as Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), warned recently.
The benchmark NSEASI opened the day’s trading on the downside in the morning, following markdown of Dangote Cement and Forte Oil and lasted from midday to early afternoon, before retracing back. It thereby reduced the losing momentum after touching intraday low of 30,136.14 basis points, from its high of 30,948.16bps, before closing the day lower at 30,527.079bps on a mixed sentiment.
Thursday’s market technicals were negative but mixed as traded volume was lower than previous day’s, in the midst of positive market breadth and mixed sentiment, as revealed by Investdata’s Daily Sentiment Report showing ‘sell’ volume of 52% and ‘buy’ position of 48% of the total daily transaction volume index of 0.74.
The impetus behind the day’s performance was seemingly strong and flat, despite being down market, as Money Flow Index reads 60.05points, from previous day’s 60.52bps, an indication that funds are still entering some stocks, despite the continued profit-taking.

Index and Market Cap
At the end of the day trading the NSEASI shed 403.33bps, closing at 30,527.07bps, after opening at 30,830.39bps, representing 1.3% decline, just as market capitalization lost N179.13bn to close at N13.45tr, from its opening value of N13.62tr.
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Bearish Sector Indices
All sectoral indexes closed the day red, except for the NSE Oil/Gas that closed 2.03% higher, despite market breadth turning positive as advancers outnumbering decliners in the ratio of 23:16.
Market activities were mixed as volume traded was down 11.69% at 217.33m shares from previous day’s 246.09m units, while value rose by 106.69% to N5.82bn from N2.83bn, just as the day’s volume was driven by financial services and petroleum stocks, like Guaranty Trust Bank, Zenith Bank, UBA, FBNH, and Oando.
Julius Berger and Champion Brewery were the best-performing stocks for the day as they topped the advancers’ table with 9.90% and 8.11% gains respectively, closing at N21.65 and N1.20 per share on low price attraction and market forces. On the flip side, Thomas watt and Capital Oil lost 10% and 8.79% respectively, closing at N0.36 and N0.21, on profit taking and market forces respectively.

Market Outlook
We expect mixed performance to continue, being the last trading day for the week, as investors take advantage of low valuation to rebalance their portfolio ahead of March year-end numbers and second half interim dividend stocks. They may also take into consideration the expected economic reforms as the new cabinet are set to start running and the plans of Central Bank of Nigeria (CBN) to reduce banks’ participation in government securities while boosting private sector lending to drive economic activities and investment.
Investors look to government’s policy direction as the market faced low liquidity problems in pre and post-inauguration season, vis-à-vis market and economic fundamentals.
The drop in prices of major blue chips in recent times has created entry opportunities, following which we expect speculative trading to shape the market direction going forward.
The ongoing volatility will continue as investors and fund managers rebalance their portfolios, with eyes fixed on political space and ongoing quarterly earnings position and post-election market dynamics. Investors should review their positions in line with their investment goals, the 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 to 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
Tel: 08028164085, 08032055467