NGSE Index Up 10.40%, Market Cap Gains N2.33tr YTD, As Investors Focus On Earnings

Market Update for January 13
It was another bullish Monday on the Nigerian Stock Exchange (NSE) as the composite All-Share index extending its eleventh consecutive session of bull transition on the strength of price appreciation by telecommunication giants MTN Nigeria. This is despite the mixed sentiments and profit-taking that hit all the sectorial indexes except for the insurance sector that continues to ride on its ongoing recapitalization exercise in its industry.
As noted earlier, the market is expected to slow down on short-term profit booking and portfolio realignment, while preparing for the earnings reporting season that kicks off in three weeks, after a long bullish run experienced by the market. We believe this pullback is long overdue, because the sharp uptrend needs some form of correction to support a sustainable recovery, reducing market risk among investors, especially for short term players.
We advise cautious trading now, especially as players who missed out in the recent rally should start identifying their entry points, using technical analysis tools for support and resistance in their choice of equities. Those yet to exit their old positions are advised to tread cautiously, because many traders and investors know when to buy but find it difficult to exit due to a lack of investment goal or objective at the point they are taking position.
Monday’s trading opened sharply on the upside before pulling back between midday and afternoon on profit-taking in some stocks, just as there was position taking in others, a situation that pushed the NSE index to intraday high of 29,909.06bps, from its low of 29,415.39bps. The session, therefore, closed higher than it opened, at 29,633.58 points on negative market breadth.
Market technicals for the session were positive and mixed, with volume traded higher than the previous session, even as breadth favoured the bears, amidst mixed sentiment as revealed by Investdata’s Sentiment Report of 44%; volume and 56% sell position.
The day’s total transaction volume index stood at 1.16, just as the impetus behind the day’s performance was strong, with Money Flow Index reading 83.62points, from the previous 77.90bps. This is an indication that funds entered the market, despite the profit-taking.

Index and Market Caps
At the close of trading, the benchmark NSEASI gained 218.19bps, closing at 29,633.58bps from the 29,415.39bps, representing 0.74% growth, just as market capitalization climbed N112.56bn higher, closing at N15.29tr from its opening value of N15.17tr, representing a 0.74% value gain.
Attention: If you have not signed up for Investdata buy and sell signal setup, don’t delay. We have just added another risk management feature and new stocks of most revered traders and investors in corporate Nigeria to our watchlist. These stocks are with double potentials.
To become a member, send ‘YES’ or ‘STOCKS’ to the phone numbers below. Take advantage of this service to buy right and sell right at the current market recovery ahead of full-year earnings reporting season portfolio reshuffling and repositioning as we await an economic reform policy to stimulate and re-track the economy again.
Monday’s advance was driven by buying interests in stocks like MTN Nigeria, UBA, Flourmills, UACN, Oando and Wema Bank, among others, impacting positively on the NSE’s Year-to-Date gain, which hit 10.40% in 11 trading days. Market capitalization YTD climbed to N2.33 trillion, representing a 17.97% growth over the year’s opening value.

Bearish Sector Indices
All sectoral performance indices were down, except for the NSE Insurance Index that rose 0.30% up, while the NSE Industrial Goods index led the decliners, after shedding 3.17%; followed by Banking, Consumer Goods and Oil/Gas indexes that shed 0.70%, 0.42%, and 0.07% respectively.
Market breadth was negative as decliner outnumbered advancers in the ratio of 21:16, while market activities rose, with volume gaining 28.07% as investors’ traded 348.24m shares worth N8.55bn, compared to previous day’s 271.91m units valued at N4.53bn. Volume for the day was driven by Access Bank, UBA, Zenith Bank, UACN and Guaranty Trust Bank.
MTNN and NPF Microfinance were the best-performing stocks, after gaining 10% and 9.68% respectively to close at N127.60 and N1.36 per share, on market sentiment, especially against the backdrop of news that the Federal Government has formally withdrawn its litigation against the company (READ MORE), as well as full-year earnings expectations. On the flip side, Cadbury and Transcorp Hotel lost 9.95% and 9.18% respectively, closing at N9.95 and N4.45 on profit takings and market forces.

Market Outlook
We expect mixed performance to continue on profit-booking which is long overdue, just like position-taking, as investors take advantage of low prices, ahead of December inflation report and portfolio managers repositioning for earnings season in Q1 2020. This is also against the backdrop of the 364-day Treasury Bills rate dropping to 5.2% while saving the bond rate stood at 7.14%.
Also, investors and traders are positioning in anticipation of the 2019 full-year earnings reports, amidst changing sentiments in the hope of improved liquidity and positive economic indices which had pushed the market out of the bearish zone.
We see Investors focusing 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 the short, medium and long-term, which is why investors should target fundamentally sound and dividend-paying stocks for possible capital appreciation in the New Year. This was noted in the 10 golden stocks and trading ideas for 2020, as discussed extensively during the Investdata 2020 Traders & Investors Summit.
Also, traders and investors need to change their strategies, because of the NSE’s pricing methodology, CBN directives and its impact on the economy in the nearest future.
Meanwhile, the Investdata team welcomes you to a bullish 2020. The home study packs of Invest 2020 Opportunities and Trade Ideas Summit containing the 10 Golden Stocks for 2020 are available. To obtain your pack send ‘Yes’ or ‘Stock’ to 08028164085, 08032055467, 08111811223 now.

Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08032055467