Market Update for the week ended February 22 and Outlook for Feb 25- March 1
It was a mixed performance on the Nigerian Stock Exchange (NSE) last week after the seeming positive sentiment by investors of the prior week was dampened by the last minute postponement of Presidential and National Assembly elections. Last week also saw a mixed bag of earnings reports by early filers of audited 2018 full year and dividend declaration season.
The low traded volume during the week reflected the switch to wait-and-see mode by market players as all attention was turned to the rescheduled election that finally held on Saturday, February 23, 2019, and the likely outcome expected to shape the economy and market direction in the next four years. Expectations are that the final results would be announced by the umpire, the Independent National Electoral Commission (INEC) and political risk associated with general elections put behind latest by Tuesday when winner will be declared.
The ongoing earnings season may likely support the stock market in the interim no matter who wins of the two major contending parties: the ruling All Progressives Congress (APC), or the Peoples Democratic Party (PDP).
Meanwhile, the week’s loss halted the six weeks of rebound after forming multiple tops on a negative sentiment after the elections were rescheduled with the NSE indicators losing 1.61% on the back of panic sell-off. There was however a rebound on Tuesday and Wednesday, with the benchmark index gaining 0.67% and 0.64% respectively, followed by a pull-back of 0.14% and 0.16% each, on Thursday and Friday bringing the week’s total loss to 0.61% on a low traded volume.
The advancers chart for the week was dominated by low cap stocks as demand for blue chip stocks were slow down due to political tension and profit taking. Momentum behind the week’s performance was flat, as reflected in the money flow index of 46.33 basis points, as against 46.77bps in previous week, an indication of indecision among players, amidst the wait for the outcome of Saturday’s Presidential polls.
Equity Indicators Last Week
The All Share Index experienced mixed trading for the week, losing 199.68 basis points to close at 32,515.52bps, after opening at 32,715.20bps, touching intraweek highs of 32,738.95bps from the low of 31,824.22bps. This is a reflection of negative breadth in the midst of low traded volume and mixed buying sentiment as revealed by Investdata weekly sentiment report showing 76% buy position and 24% sell volume, while transaction volume index stood at 1.11 points.
Similarly, market capitalization was down by N74.47bn to close at N12.13tr, from an opening value of N12.2tr, representing 0.61% value loss, which impacted negatively on the NSEASI’s year-to-date as it stood at 3.45%. Market capitalization turned positive, rising to N430.78 billion, compared to the year’s opening value of N11.72tr which represented 3.45% growth.
NSEASI Weekly Time Frame
The benchmark NSEASI pulled back as anticipated, after forming multiple tops which coincided with election postponement sentiment that drove the index southward on a low transacted volume. A breakout of the rectangle will usher in real market rebound, depending on market perception of who emerge winner of the elections to pilot the affairs of Nigeria over the next four years. On a daily and weekly time frame MACD has crossed the signal line, as the index closed above it 20-day moving average on a low volume and flat money flow index.
Mixed Sectors Indices
The sectorial performance indexes for the week were largely bullish, except for NSE Consumer and Industrial goods that closed lower for the period. As banking index led by 0.7%, driven by price appreciation in Guaranty Trust Bank, Sterling Bank and others. Also, buying interest in Oando, Eterna and Japual Oil among others; followed by Insurance index that was up by 0.02% by the help of NEM Insurance, AXA Mansard Insurance and Law Union & Rock Insurance.
Market breadth for the week was negative, with decliners ’outnumbering advancers in the ratio of 39:31, to halt the previous two weeks of bullish run.
Market activities were down in volume and value by 47.75% and 37.28% respectively at 1.48bn shares worth N17.65bn, up from previous week’s 2.85bn units valued at N28.14bn.
The best performing stocks for the week were Japual Oil and ABC Transport topping the advancers’ table with 25% and 23.87% gains respectively to close at N0.25 and N0.52 per share on low price attraction and market forces. On the other hand, Wema Bank and Vitafoam lost 18.45% and 16.32% respectively, closing at N0.84 and N4.00 on profit taking and price adjustment for dividend of N0.25 and 1for 5 bounce.
Market Outlook
With the relative peace after the elections across the country (despite some hitches in some places), we expect mixed sessions in the new week as players factor in the expected outcome of weekend’s Presidential elections whose results are gradually trickling in, as well as the ongoing earnings reporting season, vis-à-vis market fundamentals.
Profit taking and volatility from early rally witnessed in the previous week driven by traders and investors who are repositioning ahead of dividend declaration by major listed companies.
The ongoing volatility will persist as investors and fund managers reposition their portfolios, with eyes fixed on political space and ongoing full year company earnings position and post-election market dynamics. 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
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
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Tel: 08028164085, 08032055467
