strong>Market Update for December 13

Nigeria’s equity market had a strong volatile session to close lower on negative sentiment on Thursday, as its back-to-back losses extended the bearish transition resulting in a new 52-week low that has created more attractive entry points for repositioning and new entry ahead of year-end.
The improving volume of transactions in some stocks is a sign that investors are gradually accumulating low priced stocks with high probability of growing their dividend payout at the end of the day.
The NSE’s benchmark All-Share index started the day by gapping up early in the morning till mid-morning, backing and filling, unable to get further progress, before selling off in a 4-wave decline. It therefore took the index from intraday high of 30,735.20 basis points, to a low of 30,567.25bps, before closing the session at 30,568.05bps on a flat market breadth.
The marginal drop ensued after secondary key, support level was broken at 30,612 line.
As noted earlier, the composite index has had trouble lately holding onto losses.
In fact, Thursday’s was the fifth down market in the last nine trading sessions in the month of December that the NSE Index traded down 0.99% or more from its opening level at some point in the trading day.
That doesn’t tend to happen often that we see a similar string of consecutive intraday selloffs from the opening.
It must however be noted that we are still far from really extreme levels in this downtrend, though. During the month of May and August, the NSE saw eleven straight days of similar intraday selloffs. Let’s hope we don’t get to that point
Thursday’s market technicals were negative and mixed as volume traded was lower than previous day’s in the midst of strong selling pressure as revealed by Investdata’s Daily Sentiment Report, showing a sell volume of100% and 0% buy position. Volume index for the day’s total transactions was 0.79.
The momentum behind the day’s market performance was flat and neutral, as reflected in the money flow index at 20.73bps, up from previous day’s 20.48bps, indicating that funds are entering some stocks are weak in the midst of the prevailing low market liquidity.
Index and Market Cap
The benchmark NSEASI on Thursday further shed 74.30bps, closing at 30,568.55bps from the 30,642.35bps, representing 0.24% decline, just as market capitalization shed N27.13bn, closing at N11.17tr from an opening value of N11.19tr, representing a 0.24% value loss.

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This downturn was impacted by losses suffered by NSE Oil/Gas stocks, as well as: Nestle, Zenith Bank, FBNH, UBA, Stanbic IBTC Bank, Diamond Bank, and Dangote flour. This impacted negatively on Year-to-Date loss position, which climbed to 20.07%, while market capitalization decline YTD came to N2.42tr from its opening level in January, representing 18.00% decline during the period.

Mixed Sectors Indices
The sectoral indices were largely bullish except for the NSE Industrial that closed in the green, just as market breadth remained positive and with advancers outnumbering decliners in the ratio of 24:20.
Market activities were down in volume by 24.28% at 198.32m shares worth N3.7bn billion, compared to previous day’s 246.13m units valued at N3.7m. Transaction volume was driven by financial services stocks like: FBNH, Access. fidelity Bank Zenith Bank, and Guaranty Trust Bank.
AXA Mansard Assurance and John Holt were the best performing stocks, as they topped the advancers table after gaining 10% each, closing at N1.98 and N0.44 each on market forces and low prices. The decliners’ side was led by United Capital and Seplat, following their 10% loss apiece, closing at N2.56 and N540.00 each, on market force.

Market Outlook
We expect this volatilityto be sustained as bargain hunting and portfolio repositioning for year-end to shape performance of the market ahead of Santa Claus rally, as number of companies hitting new 52-week low are on the increased to reflect undervalue state of the market.
The ongoing volatility will persist as Q3 numbers assist investors and fund managers rebalance their portfolios, while watching the political space and ahead of full year company earnings position and post-election market dynamics. These are likely to drive prices north, or south, while determining market direction before or after the Presidential Election.
Investors should review their positions in line with their 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 low in the midst of weak company, economic and market fundamentals.

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Ambrose Omordion
CRO|Investdata Consulting Ltd
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