Market Update for November 19
The Nigerian Stock Exchange closed higher on Tuesday, halting the previous day’s loss position in the midst of profit-taking, amidst the ongoing interpretation of recent economic data and corporate earnings in relation to the different investment windows as capital wave continued finding a destination for higher returns.
There are the telling effects of the expected rise in market liquidity level and indeed the economy at large, due to the sharp drop in money market rates, just as the Loans to Deposit ratio of banks has been raised from 60% to 65% at the end of this quarter. These are some of the measures put in place by the Central Bank of Nigeria (CBN) to make funds available to the private sector, for boosting productivity and economic activities necessary for driving national growth and development.
Tuesday’s trading started on the downside in the morning and rebounded at the mid-morning to the afternoon on a sustained oscillation during the session, as the NSE All-Share index touched intraday low of 26,659.90 basis points, from its high of 26,861.14bps. It finally finished the day higher at 26,739.44bps, on an above-average traded volume.
The session’s market technicals were positive and mixed, as volume traded was higher than previous day’s, with breadth favouring the bulls, just as there mixed sentiment dominated trading as revealed by Investdata’s reports showing a ‘buy’ volume of 40% and ‘sell’ position of 60%. The day’s Transaction Volume Index stood at 1.25, while energy behind the day’s performance slowed down with Money Flow Index reading 49.65 points, from the previous session’s 50.84bps, indicating that funds exited some stocks and the market, despite closing higher for the day.
Index and Market Cap
The All Share Index, at the end of Tuesday’s trading, gained 48.35bps, closing at 26,739.44bps from its 26,691.09bps opening, which represented a 0.18% up, just as market capitalization was up by N23.34bn, closing at N12.91tr, from an opening value of N12.88tr, which also represented a 0.18% value gain.
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Midweek’s upturn was driven by ‘buy’ interests in stocks like MTN Nigeria, FBN Holdings, UBA, Access Bank, Forte Oil, Conoil, UACN, NB, Dangote Sugar, and Honeywell. These impacted positively on the NSE’s Year-to-Date loss, reducing it to 14.93%, while market capitalization gain increased to N1.17tr, representing 10.09% growth from the year’s opening value of N11.72tr.
Mixed Sector Indices
The sectoral performance indexes were largely bearish, except for the NSE Oil/Gas and Consumers Goods that closed by 0.49% and 0.32% higher respectively, while THE NSE Insurance index led the decliners, losing 0.40%. It was followed by the NSE Industrial Goods and Banking indexes which fell by 0.38% and 0.11% respectively,
Market breadth remained positive as advancers outnumbered decliners in the ratio of 20:13, while market activities were up in volume and value traded by 28.05% and 157.48% respectively to 394.35m shares worth N6.54bn from previous day’s 307.96m units valued at N2.54bn. Volume was boosted by transactions in UACN, FBNH, Access BankZenith Bank and UBA.
Again Healthcare company, Ekocorp, and Conoil were the best-performing stocks, topping the advancers table, after gaining 10% and 9.74% respectively to close at N4.07 and N16.90 each, on the back of market sentiment and forces. On the flip side, ABC Transport and United Capital lost 8.89% and 5.22% respectively, closing at N0.41 and N2.18on profit-taking.
We expect mixed performance to continue on a capital wave, profit-taking and repositioning in value stocks as market players digest the rising inflation and its impacts on investment returns. The changing sentiments in expectation of improved liquidity as interest rates drop in the money market ahead of the MPC meeting should guide investors. The current undervalued state of the market offer investors opportunities to position for short and medium-to-long-term views. We expect that investors would target fundamentally sound and dividend-paying stocks for possible capital appreciation as the year draws down.
Also, traders and investors need to change their trading strategies due to NSE’s pricing methodology, CBN directives and its impact on the economy in the nearest future, and another fiscal policy initiative that may provide liquidity for the economy and market.
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