NGSE Index Hits New Low, Ahead Of March Full-Year Reports, Month-End Balancing

Market Update for May 28, 2018

Nigerian Stock Exchange indices remained negative at the close of Monday’s trading, extending to the eight-consecutive day of bear-run to start the week on a less losing momentum after breaking down the lower line of the bearish channel. It thereafter retraced back to close within the channel, signaling a good support level that needs to be confirmed by mid-week’s trading session’s market forces ahead of the month-end window dressing for trading account balancing among fund managers and stockbrokers.
The day started out with a very sharp edge to the downside, as sell pressure mounted on low, medium and high cap stocks, reflecting the continued exit of smart money from their positions, joined by panicky local investors to keep the market in a sharp 4-wave decline. This was after it touched intraday lows of 38,910.82 basis points at the midday from the highs of 39,040.44bps before finally closing the session at 39,028.51bps.
Market technicals were negative and weak as the downturn continued on low traded volume in the midst of negative market breadth, with high selling pressure of 91%, while buying volume was 9% on a volume index of 0.63 of the day’s total transactions. The ongoing sell-offs during the day reflected in the money flow index at 12.46 bps from previous day’s 25.06 bps. This is an indication that liquidity in the market is becoming even lower and weaker, unable to drive prices as funds continue leaving the market.
The market is still on the lookout for a major news or fiscal stimulus capable of triggering demand for equities at a time Nigerian stocks remain undervalued, compared to its counterparts. This is especially true of banking stocks that have suffered the most in the recent sell down, considering the robust balance sheet of these Nigerian banks with Price/Earnings and Price/Book of 7.78x and 0.92x respectively.

Index and Market Cap
All Share index shed 295.11 bps to close at 39,028.51 bps, after opening at 39,323.26 bps, representing a 00.75% decline on a low volume that was lower than the previous day’s. Similarly, market capitalisation lost N106.9bn to close at N14.14tr from an opening value of N14.24tr, also representing 0.75% value loss to remain in the red. The NSE Index broke down the 39,000 psychological line, hitting 38,910.82bps, before rebounding on value gain by Dangote Cement and Eterna.
The market is likely to create a strong support level around 38,000bps to 37,800bps with improved buying interest ahead of the March year-end earnings reports.
The continued slide of market indicators is not the end of the equity market, but a time to change and adopt another trading or investing strategy to ensure you benefit from the bearish cycle by effectively combining technical and fundamental analyses to trade profitably. This what the Investdata Buy & Sell Signal Setup offers you by just sending YES or STOCKS to the phones numbers below. Our watch list has increased due this bear transition, take advantage of this service to buy right as the market looks for a new support level.
Meanwhile, Monday’s downturn was due to sell-offs in medium and high cap stocks like Guaranty Trust Bank, Zenith Bank, UBA, FBNH, Honeywell, Dangote Flour, Oando, UBN, FCMB and Fidelity Bank. These impacted negatively on the NSE’s Year-to-Date returns, which fell to 2.05%; while market capitalisation gain for the period was shaved to N498.64bn, or 3.11% above the year’s opening value.

Bearish Sector Performance
The sectorial performance for the day was bearish with the NSE Industrial Goods, Banking and Insurance slowing down by 2.25%, 1.95% and 1.11% to top the declining position of the sector performance.
Market breadth was negative as decliners outnumbered advancers in the ratio of 33:10 to continue eight days of down market.
Market activities were down in volume and value by 24.89% and 44.30% respectively to 222.29m shares worth N1.64bn from the previous day’s 296m units, valued at N2.95bn. Transaction volume was boosted by financial services stocks like AIICO Insurance, Access Bank, FBNH, UBA and Lasaco which witnessed increased trading to top the activity chart.
Consolidated Hallmark and Eterna were the best performing stocks that topped the advancers’ table gaining 6.7% and 4.9% respectively to close at N0.32 and N5.53 each. This was due to the interplay of market forces and sentiments.
On the flip side, FCMB and Japaul Oil were the worst performing, losing 9.1% and 8.3% respectively to close at N2.00 and N0.22 each on profit taking and market forces.

Market Outlook
We expect selling pressure to moderate and volatility to continue as end of the month trading account balancing and portfolio reshuffling ahead of March account full year earnings reports in June. Equities have become cheaper, translating to higher yields. Investors should review their position in line with their investment goal and take action as events as it unfolds.
However, we would like to reiterate that investors should not panic but go for equities with intrinsic value, especially during this season were less earnings are released ahead of march full year earnings release and Q2 interim dividend payment are expected in the market arena very soon.
We advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst improving company, economic and market fundamentals.
It is time to combine fundamentals and technical tools to take decision by knowing the support and resistant level to reposition or exit any position. A stock market is in cycles. You must know the cycle it, or particular stocks therein are to successfully manage your trading and investment risk. For stocks that should be on your shopping list to buy in these seasonal changes as the year unfolds, sign up to INVESTDATA BUY AND SELL signal setup by calling 08032055467.
Get your home study pack of the INVEST 2018 Traders & Investors Summit and ride with the current recovery on Nigeria’s stock market and economy, thereby ensuring that you invest and trade with knowledge. You can also access stocks analysed in the home study pack of the Chart Summit held on February 24, 2018, including the 15 stock-picks for 2018 are available now to guide your positioning as trading for the year.
Comprehensive training materials on stock Trading and Investing for Financial Independence series are Available, you can play and watch on your mobile phone, laptop, desktop and TV set. Kindly call or send YES to 08032055467, 08028164086 or 08111811223.

Ambrose Omordion
CRO|Investdata Consulting Ltd

info@investdataonline.com
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ambrose.o@investdataonline.com
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Tel: 08028164085, 08032055467

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