Market Update for November 12
The low volume of trading activities on the Nigerian Stock Exchange continued on Monday, following which the benchmark indicators again closed lower.
The benchmark index started the week marginally on the upside in the morning session, after which it oscillated through the mid-morning till midday as equities that had suffered heavy losses, hitting 52-week lows, staged a rebound. This was helped by their seemingly low price attractions, before witnessing a pullback by the afternoon, after touching intraday highs of 32,218.71 basis points, from a low of 32,123.14bps. There was however a retracement up in the last minutes to close the day at 32,143.41bps on a slightly improved volume.
The rumour of a planned acquisition of Diamond Bank Plc, by Access Bank, a peer, triggered selloffs in banking sector stocks, following which NSE Banking index shed 1.03%. Note that some second-tier banking stocks continue to witness sell pressure since the announcement by the Central Bank of Nigeria (CBN) noted in its half-year report published recently that three commercial banks have liquidity ratios below the 30% regulatory minimum. This is also despite the drop in the non-performing loans (NPL) ratios of bank from the previous 14.75%, to 12.45%, which we note is still very high, compared to 5% threshold set by the apex bank.
The huge NPL ratios of some of these second tier banks have negatively affected their bottom-lines, leading to a possible non-payment of dividend to investors by year-end. The recent financials of these banks show their health status, looking at loans, deposits, net assets, retained earnings and other pointers.
Monday’s market technicals were negative and mixed with low volume traded, despite above the previous day’s transactions, amidst positive market breadth and strong selling sentiments as revealed by Investdata’s Daily Sentiment Report, which shows a sell volume of 79% and buy position of 21%. The volume index for the day’s total transactions was 0.62.
Impetus behind the day’s market performance was down due to selloffs in financial service stocks. Money flow index for the session fell to 47.59bps, from previous day’s 52.27ps, indicating that funds are leaving some stocks and market.
Index and Market Cap
At the end of Monday’s trading NSEASI shed 56.80bps, closing at 32,143,41bps, after opening at 32,200.21bps, representing 0.18% decline, just as market capitalization dropped by N20.73 billion, closing at N11.73tr from an opening value of N11.72tr, or 0.18% dip in value.
Attention: join Investdata buy and sell signal setup to get all our in-depths analysis on the picture and to get access to our carefully created watch list. To become a member, send ‘YES’ or ‘STOCKS’ to the phone numbers below. The number of stocks on our watchlist has increased due to the prolonged market correction. Take advantage of this service to buy right and sell right.
The session’s downturn was impacted by selloff in medium and high cap stocks like: Guaranty Trust Bank, Stanbic IBTC, Zenith Bank, UBA, Fidelity Bank, FCMB and Dangote Sugar. This impacted the Year-to-Date returns, negatively to increase its loss position to 15.95%, while market capitalization decline reduced to N1.87tr since January, representing 13.77% drop, from the year’s opening value.
Mixed Sectors Indices
Sectorial performance was largely bearish, except for the NSE Consumer goods and Oil/Gas that closed higher. Market breadth was positive with advancers outweighing decliners in the ratio of 14:12, to continue the two sessions of bear market.
Market activities were mixed as volume was up by 17.2% to 142.11m shares from Friday’s 121.26m units while value dropped marginally by 1.54% to N1.57bn from previous day’s N1.58 billion.
Transaction volume was boosted by financial service stocks like: Diamond Bank, GTBank, UBA, FBNH and Zenith Bank.
Regency Insurance and Union Diagnostic were the best performing stocks during the session, topping the advancers’ table, after chalking 10% and 8% respectively to close at N0.22 and N0.27 each on market forces.
On the flip side, Abbey and Diamond Bank lost 9.4% and 9.38% respectively to close at N1.06 and N1.16 each as aresult of market sentiment and weak numbers
Market Outlook
We expect the current oscillating trend to continue as investors digest company numbers, ahead of economic data, given that there is no new incentive for the market in November, unless and until there is a change in the narrative. Going by the timetable of the National Bureau of Statistics (NBS) released earlier in the year, the nation’s Q3 Gross Domestic Product (GDP) report is slated for release on Tuesday, November 27, same date as the Q3 capital importation report.
The ongoing volatility will persist as Q3 numbers assist investors and fund managers rebalance their portfolios, while watching the political space and ahead of the expected Q3 GDP and full year company earnings position. These are likely to drive prices north, or south, while determining market direction before or after Presidential Election.
Investors should review their positions in line with investment goals, 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 guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst mixed company, economic and market fundamental.
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CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467
