Market Update for May 2
Thursday’s session was an interesting, yet volatile and mixed session on the Nigerian Stock Exchange (NSE), as trading for the month of May kick-started on a marginally positive note, after the heavy decline as the investors reacted to the weak Q1 earnings season, which flowed from a mixed 2018 full-year outing. Recall that the market suffered decline much earlier, as investors took also reacted negatively amidst the tension generated by the last general elections in the country.
The marginal gain recorded on the first trading session of the new month, nonetheless, was impacted by the improved buying interest across all sectors, except banking.
The changing market dynamics are likely to continue, ahead of this month’s inauguration of the President Muhammadu Buhari and his All Progressives Congress (APC) government for a second four-year term. It is expected to come with new cabinet and policies that would correct certain anomalies and enhance the restoration of the much-needed confidence among Nigerians in the government. This can only come if the government executes people-oriented economic policies capable of boosting productivity in every facet of the economy that will leave legacies after eight. Investdata believes that it is the number of ordinary Nigerians impacted by such policies at this time that matter, rather than excuses for failure, intentions or needless regrets.
The impact of Nigeria’s yearly budgets in recent times have not had the much expected trickle-down effect necessary to trigger economic growth and development on a large scale as expected, given that government is the biggest spender. This has been blamed on the government’s disbursement and implementation style which hinders the flow of these resources. Construction and development of infrastructure drive the economy and create employment to oil the wheel of a progressive economy. But unfortunately, the reverse is the case of Nigeria as the economy struggles despite the seeming improvement in economic indices.
Nigerians, therefore, expect a new strategy from the economic managers from the implementation of the 2019 budget approved by the National Assembly last month, which is now awaiting assent by President Buhari.
The NSE All-Share Index opened on Thursday with slight upside movement, before pulling back between mid-morning and early afternoon, touching intraday lows of 29,104.10 basis points from its high of 29,195.70bps. It then retraced up on increased buying interest to finally close up at 29,171.73bps on relatively low traded volume.
Market technicals for the session were positive but weak with volume traded lower than previous day’s in the midst of negative breadth and buying pressure as revealed by Investdata’s daily sentiment report that shows a buy volume of 74% and sell position of 26% of the total daily transaction volume index of 0.69.
The energy behind the day’s market performance was relatively strong as shown by Money Flow Index of 51.97 points, from previous day’s 50.85bps, indicating a gradual positioning that triggers entrance of funds to the market ahead of Q1 GDP and other economic indicators for April.

Index and Market Cap
Trading closed with the NSEASI gaining a marginal 11.99bps to close at 29,171.73bps, after opening at 29,159.74bps, representing a 0.04% rise, just as market capitalization inched N4.51bn higher to N10.96tr, compared to its opening value of N10.96tr, also representing 0.04% value gain.
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The day’s upturn was driven by position taking in stocks like Nigerian Breweries, 11 Plc, CCNN UACN, Dangote Sugar, Dangote Flour, FCMB, FBNH, and Transcorp, among others. This impacted slightly on the Year-to-Date loss, as it stood 7.19%, just as market capitalization’s dropped to N712.84bn or 6.44%, from the year’s opening level of N11.72tr.

Bullish Sector Indices
The sectoral performance indices for the day were largely bullish, except for NSE Banking that closed lower. Market breadth was negative as decliners outnumbered advancers in the ratio of 26:21.
Market activities in volume and value were down by 48.59% and 65.56% respectively to 279.4m shares worth N2.82bn, as against previous day’s 543.92m units valued at N8.2bn. Volume was driven by financial services, conglomerates, ICT and oil stocks like Transcorp, Japaul oil, Chams, Access Bank, and FBN Holdings, as investors continued digest to their fundamental news. Transcorp and Japaul Oil were the best-performing stocks for the day, gaining 9.9% and 9.1% respectively and closing at N1.22 and N0.36 per share, on market news and forces. Interest in Transcorp may not be unrelated to its recent emergence as preferred bidder for the Afam Electricity Generation Company with a N105.3bn (about $293m) bid.
On the flip side, Afromedia and Academy Press lost 10% and 9.1% respectively, closing at N0.45 and N0.30, on market forces.

Market Outlook
We expect the mixed performance to continue as market players digest the Q1 numbers while awaiting the 2019Q1 GDP data and the fiscal stimulus since the 2019 budget has been passed. More importantly, we expect that the government’s disbursement and implementation style in 2019 and beyond will change for good so as to drive the economy.
The NSE index on daily time frame is forming a double bottom that supports reversal, but let us wait for confirmation as trading opens this morning.
Investors look to government’s policy direction as the market faces low liquidity problems in the ongoing Q1 earnings reporting season, vis-à-vis market and economic fundamentals.
The drop in prices of major blue chips in recent times has created entry opportunities, following which we expect speculative trading to shape the market direction going forward.
The ongoing volatility will continue as investors and fund managers rebalance their portfolios, with eyes fixed on political space and ongoing quarterly earnings position and post-election market dynamics. Investors should review their positions in line with their investment goals, the 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 to 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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