Market Update for January 17
The Nigerian Stock Exchange (NSE) continued in its recovery mode on Thursday from six consecutive sessions of decline it suffered into the New Year, with the benchmark All-Share index recording six straight sessions of gains.
Trading started on a downside in the morning which lasted till mid-morning before retracing up between midday and the afternoon on the back demand for insurance and high cap stocks. This was after it touched intraday low of 30,297.38 basis points, from a high of 30,597.38bps, before closing the session at 30,583.21bps on a low traded volume.
The market has since had a 3.95% bounce over the six-day period, but still needs another 2.7% to recoup the losses suffered between January 2, and when the recovery started. The bad news however is that the catalysts for this recovery are weak, due to low liquidity and investor confidence in the days leading to the all-important February 16 Presidential election. This might not support the breakout of this first resistance point of 30,578.34bps which were December 17 and January 7 levels, given that the possibility of a pullback at this point is high with the imminent profit taking by traders before the elections.
The major forces that will propel the market will be, first the successful conduct of the presidential election, no matter who wins between the two major contenders: the ruling All Progressives Congress (APC) and the Peoples Democratic Party (PDP). That immediate breath out, in addition to 2018 full year earnings reporting earnings will kick off in the same period, waking up the market in view of the low stock valuations and high dividend yield after the decline, which began in 2018 into the very early sessions of January.
Despite the recent recovery this week, the Price to Earnings on this year earnings estimate is still below 12, which is cheap relative to history and indeed, very cheap relative to inflation rate.
Market technicals for Thursday were positive and mixed with traded volume lower than previous day’s in the midst of a positive breadth and strong sentiment as revealed by Investdata’s Daily Sentiment Report, showing buy volume of 95% and 5% sell position. Volume index for day’ was 0.70.
The energy behind the day’s market performance was weakened further, despite the bull-run, as reflected in the 19.80bps money flow index, from previous day’s 23.32bps, an indication that funds are leaving the market and some stocks, due to profit booking that supports a possible market pullback any moment from now.
Index and Market Cap
At the close of trading on Thursday, NSE’s benchmark index gained 122.53bps, closing at 30,583.21bps, from 30,460.68bps, representing 0.40% growth; while market capitalization climbed by N45.7bn, closing at N11.4tr from the opening value of N11.36tr, representing a 0.40% value gain. The again successfully tested the first resistance level where it closed on a low volume, which suggests weakness as it is also forming a divergence, with money flow index looking down. Today market forces will determine continuation of trend or reversal.
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The day’s upturn was resulted from price appreciation in low, medium and high cap stocks like Dangote Cement, NB, 11 Plc, Lafarge Africa, UBA, and Dangote Flour, among others, thereby reducing Year-to-Date loss to 2.70%. It also reduced the loss in market capitalization further to N315.96bn, from the year’s opening level N11.72tr representing a 2.70% decline.
Mixed Sectors Indices
All sectoral performance indices were largely bullish, except for NSE banking that closed red, while market breadth remained positive, with advancers outnumbering decliners in the ratio of 23:15. Market activity were mixed as volume traded was down by 24.46% to 231.01m shares, from the previous day’s position of 305.81m units, while value was up by 35.85% to N3.26bn, from the previous day’s N2.1bn. The day’s transaction volume was driven by financial services stocks: Diamond Bank, Guaranty Trust Bank, Zenith Bank, Access Bank and FBNH.
Neimeth Pharmaceuticals and NEM insurance were the best performing stocks for the day, after gaining 9.84% and 9.72% respectively, closing at N0.67 and N2.26 per share on low price attraction and market forces. On the flipside, e-Tranzact and Resort Savings led the decliners’ table, losing 9.87% and 9.68% respectively to close at N3.56and N0.23 each, on market forces.
Friday’s being the last trading day of the week, expect a pullback on short-term profit taking, amidst sustained volatility, while investors continue repositioning for the 2018 full year earnings season that will shape market performance. We advise cautious trading and investing why positioning in fundamentally sound equities.
The ongoing volatility will persist as investors and fund managers reposition their portfolios, with eyes fixed on 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 mixed company numbers, weak economic and market fundamentals.
PORT HARCOURT 2019
Investdata will be in Port Harcourt, Rivers State where we would reveal investment opportunities available for smart investors on the Nigerian Stock Exchange this year.
Venue: Emerald Hotel, 193, Aba Road Rumuola, Port Harcourt, Rivers State,
Date: Saturday 26, January 2019
Registration Begins at 9.am prompt
Admission is free
Comprehensive Home study packs of INVEST 2019 TRADERS & INVESTORS SUMMIT held on December 8, 2018, containing the 10 golden stocks for 2019 will however be on sale for N20,000 each.
The FIRST 20 persons to register at the venue will get 20% discount.
This seminar will cover the following:
Review of 2018 market performance
Outlook for 2019 and Post elections expectations
Dividend & Bonus expectation in 2019
Sector by Sector Analysis and projections
How to profit from Merger and Acquisition as a trader or Investor
RE: INVEST 2019
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CRO|Investdata Consulting Ltd
Tel: 08028164085, 08032055467