Market Update for February 19
Nigeria’s stock market had a very volatile and mixed session on Tuesday as sentiments turned positive, closing higher on a strong buying interest in banking stocks. The NSE benchmark index retraced up on the impressive dividend payout by Zenith Bank that triggered demand for high-cap stocks and many stocks followed, based on high expectations that helped power the numbers higher for the day. It is expected also that political correctness after the general elections will further support the market, no matter who wins, whether the ruling All Progressives Congress, or main opposition Peoples Democratic Party (PDP).
Trading opened the day on downside in the morning, continuing from Monday, but rebounded slightly at mid-morning before pulling back by the midday to early afternoon, after which it rallied back up on earnings declaration It then touched intraday highs of 32,416.04 from its lows of 32.157.27 basis points, before finally closing the day at 32,406.18 on a low traded volume.
During the day also the NSE All Share index ran up, going into a 5-wave corrective mode that signals an imminent end of the bear-run with more corporate earnings likely to hit the market in the coming days.
Tuesday’s market technicals were positive and strong with volume traded higher than previous session’s in the midst of a positive breadth and high buying sentiment, as revealed by Investdata’s Daily Sentiment Report, showing a buy volume of 96% and sell position of 4%. Daily transaction volume index for the day stood at 1.02.
Momentum behind the day’s market performance was high, to reflect the increasing bargain hunting as shown by money flow index at 82.86points, from previous day’s 78.31bps, indicating that funds are entering the market and some stocks.
Index and Market Cap
The NSEASI gained 216.113bps at the end of Tuesday’s session, closing at 32,406.18bps after opening at 32,190.07bps, representing a 0.67% growth, while market capitalization climbed N80.6bn up, closing at N12.08tr, from the opening value of N12tr. This represented a 0.67% value gain.
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The upturn recorded today was impacted by price appreciation of medium and large cap stocks like Unilever Nigeria, Guaranty Trust Bank, Zenith Bank, UBA, Access Bank, Diamond Bank, Oando, Dangote Sugar and Honeywell, among others. This impacted positively on Year-to-Date NSE gains which inched to 3.10%, while YTD gain in market capitalization climbed to N268.44bn from the year’s opening level of N11.72tr, representing a 3.10% growth.
Bullish Sectoral Indices
All the sectoral indices were largely bullish, except for the NSE Industrial goods. The NSE Banking index led the sectorial performance by 2.97% on expectations of full-year results from stocks in the sector as already signaled by Zenith Bank Plc on Tuesday (READ HERE), while market breadth was positive with advancers outnumbering decliners in the ratio of 16:12.
Market activities were up in volume and value by 55.01% and 23.69% respectively to 361.82 shares worth N4.16bn, from previous day’s 233.42 units valued at N3.36bn. Transaction volume was driven by dividend paying stocks like: Transcorp, UBA, Zenith Bank and Guaranty Trust Bank.
The best performing stocks for the session were Japual Oil and Sovereign Trust Insurance which chalked 9.52% each to close at N0.23 and N0.23 respectively on market forces; while the flipside was led by First Aluminum and Transcorp after shedding N10%% and 9.74% respectively to close at N0.27 and N1.39 each, on profit booking and market forces.
Market Outlook
The market rebounded on improved volume despite profit taking and volatility that continued as investors and traders reposition for 2019 dividend declaration season and post-election rally expected to shape market performance in the interim. We advise cautious trading and investing while positioning in fundamentally sound equities. We expect early filers like United Capital, Africa Prudential, and Forte Oil to hit the market with their numbers any moment from now.
Volatility will also continue as investors and fund managers reposition their portfolios, with eyes fixed on political space, but 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
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Ambrose Omordion
CRO|Investdata Consulting Ltd
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