NGSE Indicators Bearish, But Insurance, Banking, Industrial Goods, Services Stocks Become Defensive

Market Update for September 23
Trading activities on the Nigerian Stock Exchange on Monday was again mixed and volatile, opening the week lower as negative sentiments overwhelmed trades with selloffs and profit-taking which hit high cap stocks and others, pulling back the key performance index on a low traded volume. This signaled the onset of yet another wait-and-see attitude among market players.
The low and dull mood of the market revealed that investors and traders are still interpreting and analyzing the decision by the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) to retain its benchmark rates, the nation’s emerging macroeconomic indices and policy statements from fiscal and monetary authorities so far. Also, all eyes are on the Federal Government’s newly-constituted Economic Advisory Council (EAC) to provide a workable roadmap. This would be after a careful review of the administration’s Economic Recovery & Growth Plan (ERGP), among other policies capable of triggering productivity and consumption that will support and sustain national growth.
Meanwhile, the day’s trading opened slightly on the upside, but slowed down and oscillated between the mid-morning and midday, before pulling back by the afternoon on profit-taking and selloffs in highly capitalized stocks and others. This pushed down the index to intraday low of 27,650.82 basis points, from a high of 27,704.62bps to close the session lower on a negative breadth.
On Monday, stocks like RT Briscoe, Guinness Nigeria, and Presco hit new lows of 12, 10 and two-year lows respectively.
Monday’s market technicals were negative as volume, value and number of deals was lower than previous day’s in the midst of market breadth that favoured the bears and high selling pressure as revealed by Investdata’s Daily Sentiment Report, which showed ‘buy’ volume of 88%, while ‘sell’ position stood at 12% on total daily transaction volume index of 0.45. The impetus behind the day’s performance showed strength, despite the down market as Money Flow Index reads 52.24 points, from the previous session’s 46.14bps which indicated that funds entered some stocks and the market. This was, however, notwithstanding the decline in transaction volume which indicates that smart money is up to something. Market players should nonetheless wait to confirm this as the market opens on Tuesday.

Index and Market Cap
At the close of the day’s trading, the composite Nigerian Stock Exchange (NSE) All-Share Index (ASI) shed 42.53bps, closing at 27,650.28bps from its 27,698.69bps opening level, representing a 0.17% decline. Market capitalization lost N22.1bn at N13.46tr, from an opening value of N13.48tr, which also represented a 0.17% value loss.
Meanwhile, the MACD and Money flow index remained bullish and positive respectively, as they continue to look up despite the negative sentiments.
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The session’s downturn was driven by profit booking and selloffs in stocks like Dangote Cement, Presco, Access Bank, NB, UACN, FBNH, Oando, Lafarge Africa, among others. This impacted negatively on the NSE’s Year-to-Date loss, which increased to 12.03%, even as YTD market capitalization gain dropped to N1.63tr, representing 14.59%, from the year’s opening level of N11.72tr.

Bearish Sector Indices
The sectoral performance indexes were largely bearish, except for the NSE Banking index which closed 0.15% higher. The NSE Insurance index led the decliners, losing 1.31%, followed by Oil/Gas with 0.25%, with the Industrial and Consumer Goods indices lost by 0.24% and 0.16% respectively.
Market breadth turned negative as decliners outnumbered advancers in the ratio of 24:18; while market activities in volume and value fell by 85.17% and 38.35% respectively to 109.56m shares worth N888.17m, from the previous day’s 177.57m units valued at N5.92bn. The day’s volume was driven by transactions in FBN Holdings, Transcorp, Access Bank, UACN and Wapic Insurance.
Trans-Nationwide Express and NCR were the best-performing stocks, after gaining 10% each to close at N0.77 and N4.50 each, on market forces. On the flip side, Presco and UACN Property lost 9.93% and 9.86% respectively, closing at N40.35 and N1.28 on profit-taking.

Market Outlook
The outlook remains mixed with the expected profit-taking, as investors position ahead of the quarter-end, while bargain hunters take advantage of low stock prices to position, now that the NSE index has pulled back. Discerning investors should latch on it to average down and recoup their investment immediately a recovery stage is set through economic policies and things start to change gradually to influence equity prices positively, while investors watch these sectors that have become defensive recently like insurance, banking, industrial goods, services, and oil/gas that will go bullish in no distance time. Also, with all eye fixed on the newly appointed economic advisory council to settle down and kickoff.

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