Market Update for January 9
It was a bloody and volatile midweek session on the Nigerian Stock Exchange (NSE) as the benchmark All-Share index extended its bearish run for the sixth consecutive day amidst high selling pressure ahead of the 2019 presidential election holding on February 16. The increasing rate of uncertainties continues to trigger the continued selloffs as investor confidence is overshadowed by increased political threat, at a time the economy is underperforming and yet to meet the change Nigerians have been expecting.
The market is making lower lows in the New Year already, resulting in 52-week and year-to-date loss of 27.32% and 6.66% respectively, thereby making the market attractive for new entrance. In the words of American business magnate, Warren Buffett: “Get greedy when others are fearful and be fearful when others are greedy.”
The possibility of market reversal in the interim before the election proper is high and imminent. But given the absence of any strong external shock, equity market’s recovery will gain momentum after the general elections, irrespective of who emerges winner of next month’s presidential election, so long as there are no post-election crises.
Wednesday’s trading for the day started with slight up movement in the early morning session, moving back and forth until midday before the sharp selloffs in the early afternoon through to the close of the session. This was after the index touched intraday low of 29,336.80 basis points, where it closed for the day, from highs of 30,084.28bps on a low traded volume.
Midweek market technicals remained negative and weak as traded volume was low, despite higher than previous day’s in the midst of negative breadth and sentiment, as revealed by Investdata’s Daily Sentiment Report, showing a sell volume of 100% and 0% buy position. Volume index for day’s total transactions was 0.72.
The momentum behind the day’s market performance was weak and flat, as reflected in the 31.29bps money flow index, from previous day’s 31.35bps, to indicate that funds are leaving some stocks and market.

Index and Market Cap
The All Share Index at the end of the day shed 699.5bps to close at 29,38.80bps, from 30,036.15bps, representing 2.33% decline, just as market capitalization lost N260.79bn, closing at N10.94tr, from the opening value of N11.20tr, representing a 2.33% value loss.
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The downturn followed huge losses by stocks in the industrial Goods and Insurance sectors like Dangote Cement, Access Bnak, Zenith Bank, FBNHolding, UBA and Diamond Bank, Access Bank as well as Honey flour, Dangote Flour. These further deepened Year-to-Date loss to 6.66%, while market capitalization losses increased to N710.76bn, from its opening level of N11.72tr representing a 6.66% decline.

Bearish Sectors Indices
All sectoral indices closed red, except for the NSE Consumer Goods and Oil/Gas that closed 0.74% and 0.15% up. Market breadth maintained the negative position, as decliners outweighed advancers in the ratio of 19:14. Market activities were mixed as volume was up by 8.45% to 234.9m shares, from the previous day’s 216.25m units, while value declined by 15.88% to N2.25bn from N2.65bn. Transaction volume was boosted by financial services and conglomerates stocks: Diamond Bank, GTBank, Zenith Bank, FBNH, Transcorp
The best performing stocks were Julius Berger and Unilever that topped the advancers table, gaining 10% and 9.63% respectively to close at N25.85 and N37.00 each, on market forces and low prices attraction. On the flipside, University Press and NEM Insurance led the decliners’ table, shedding 10% and 9.91% respectively to close at N1.89 and N1.91 each, on profit taking.

Market Outlook
Technically the market is dicey now as it has broken down the 30,000 mark which was confirmed at the end of midweek’s trading, such that 28,000bps support level may be the last level before any rebound. Since MACD, had turn bearish on crossing signal line to support the ongoing trend and volatility amidst repositioning for 2018 full year earnings season to shape market performance ahead of the various factors listed above. We advise cautious trading and investing in the days ahead.
The ongoing volatility will persist as Q3 numbers assist investors and fund managers rebalance their portfolios, while watching the political space and ahead of full year company earnings position and post-election market dynamics. These are likely to drive prices north, or south, while determining market direction before or after the Presidential Election.
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
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Tel: 08028164085, 08032055467