Market Update for December 18
Last-minute positioning continued on the Nigerian Stock Exchange ahead of the expected Santa Claus rally, year-end window dressing by fund managers, as well as the major earnings reporting season in the first quarter of 2020, which have so far kept the market in its oscillating mood. These signals and support strong recovery as positive sentiment for equity assets remained high despite the up and down movement of the composite All-Share index as it closed marginally high on a flat market breadth on Wednesday.
Searching for ways to better understand and play the equity space now needs new actionable trade and investment ideas as mixed trading pattern continued on the Nigerian bourse at the midweek with activities slowing down on the back of mixed sentiments. Market players, it does seem, are digesting the recent macroeconomic data released by National Bureaus of Statistics and the expected impact of Tuesday’s early assent to the 2020 budget by President Muhammadu Buhari, the first time since 1999.
Meanwhile, midweek trading started slightly on the upside and oscillated between the mid-morning and afternoon on mixed sentiments that pushed the benchmark NSE All-Share index to an intraday high of 26,691.44 basis points from its low of 26,646.64bps. It thereafter retraced up mildly and closed the session above at 26,666.74bps on above-average traded volume.
Midweek’s market technicals were weak and mixed, as volume traded was lower than the previous session, on a par market breadth and mixed buying interest as revealed by Investdata’s Sentiment Report of 43% ‘buy’ volume and 57% sell position. The day’s total transaction volume index stood at 0.79, with momentum behind the day’s performance sliding down, just as Money Flow Index read 52.91 points, from the previous 61.69bps. This is an indication that funds left some stocks, despite the market closing slightly high.
Index and Market Caps
The NSEASI, at the end of session trading, inched up by 5.29bps, closing at 26,665.73bps from the 26,660.44bps, representing 0.02% marginal gain, just as market capitalization went up by N2.56bn to close at N12.87trillion, from an opening value of N12.87 trillion, which also represented a 0.02% value gain.
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Wednesday’s upturn was impacted by the demand for stocks like Stanbic IBTC, Okomu Oil, FBNH, UBN, PZ Cussons, Nahco, Custodian Investment, Cadbury and C & I Leasing, all of which impacted mildly on the NSE’s Year-to-Date loss, reducing it to 15.16%. Market capitalization YTD gains also fell slightly to N1.15tr, representing a 9.81% growth over the year’s opening value of N11.72tr.
Mixed Sector Indices
The sectoral performance indices were largely bullish, except for the NSE Banking index that closed lower by 0.44%, while the NSE Insurance index led the advancers, inching up 0.16%; followed by the Consumer goods Index’s 0.11%, and the NSE Consumer Goods, which gained 0.01%, while NSE Oil/Gas index closed flat.
Market breadth was at par as advancers were equal to decliners in the ratio of 17:17, while market activities fell in volume and value traded by 29.90% and 33.35% respectively to 232.69m shares worth N3.19bn, from the previous day’s 331.51m units valued at N4.78bn. The day’s volume was driven by Access Bank, Zenith Bank, Guaranty Trust Bank, and FBNH.
The best-performing stocks for the day, were Ikeja Hotel and Charms, as they chalked 9.8% and 9.1% to close at N1.12 and N0.33 respectively, on low price attraction and market forces. On the flip side, Uacn Property and Arbico lost 10% and 9.80% respectively, closing at N0.90 and N3.51 on selloffs and profit-taking.
We expect a sustained mixed performance amidst profit-taking and positioning, as investors take advantage of low prices to position, ahead of the usual Santa Claus and year-end rally as capital flow and repositioning in value stocks continue. There are, also, the changing sentiments in expectation of improved liquidity and positive economic indices.
We expect that Investors would focus on the upcoming full-year earnings season, targeting companies with strong potential to grow their dividend on the strength of their earnings capacity.
Again, the current undervalued state of the market offers investors opportunities to position for short and medium-to-long-term. That is why investors should target fundamentally sound and dividend-paying stocks for possible capital appreciation as the year winds down, giving way to 2020, just as was noted in the 10 golden stocks and trading ideas for 2020 discussed last weekend during the Investdata 2020 Traders & Investors Summit.
Also, traders and investors need to change their strategies owing to NSE’s pricing methodology, CBN directives and its impact on the economy in the nearest future.
Meanwhile, we appreciate all that made Invest 2020 Traders and Investors Summit a success. The home study packs are available. To grab your pack, Send Yes or Stock to 08028164085, 08032055467, 08111811223 now.
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