NGSE Remains Volatile, As Investors Review Q3 Numbers, Economic Data, 2019 Risk


Thursday turned out another very volatile session on the Nigerian Stock Exchange (NSE), at the end of which the composite All-Share index closed positive, continuing the oscillating trend as more Q3 earnings reports graced the market from the banking sector. These numbers have revealed relatively strong numbers capable of supporting future rally and mouth watering payouts at the end of the current financial year, considering the prevailing low prices of these equities.
The NSE index opened the day on a little downside in the morning session, from where it retraced by the mid-morning to midday, on increased demand for highly capitalized stocks, touching intraday highs of 32,877.32 basis points from lows of 32,402.558bps. It broke out the recent resistance level, before pulling back by afternoon to close at 32,664.63bps on a profit taking and low traded volume.

The retracement was due to impressive numbers from the banks that have so far released their scorecards, in addition to demand for blue chip stocks ahead of their quarterly earnings reports. Low liquidity however continues in the market given that many investors had earlier followed the hot money to exit positions for safety ahead of the 2019 polls which continues to plague the market’s performance. Prices have persistently moved up today and down tomorrow, in the absence of strong liquidity, as well as the much needed boost by economic indices to support the sound fundamentals of listed companies.
Corporate earnings released so far and the expected results will however further confirm, the impact, or otherwise, of the impact of economic activities for the period on company performance, as revealed by the numbers already in the public domain. They will give insights into how the nation’s Q3 GDP will look like when finally published by the National Bureau of Statistics (NBS), because a further decline will confirm, or allay fears of another slip into recession.
Zenith Bank (READ) and Trans-nationwide Express released their Q3 earnings reports during Thursday’s trading session and the numbers were mixed, as both companies grow their bottom line by 11.6% and 180% respectively, with Earnings Per Share of N4.58 and N0.04 each.
Thursday’s market technicals were positive and weak with mixed sentiment, low traded volume in the midst of negative market breadth and above-average buying pressure, judging by Investdata’s Daily Sentiment Report, showing a ‘buy’ volume of 55% and sell position of 45%. The volume index for the day’s total transactions was 0.85.
The momentum behind the day’s market performance was strengthened as more numbers hit the market, while money flow index stood at 46.29bps, from previous day’s 40.55bps, an indication that funds are reentering some stocks, despite profit taking.

Index and Market Cap
At the end of Thursday’s trading, the NSE ASI gained 227.28bps, closing at 32,664.63bps, after opening at 32,437.35bps, representing a 0.70% growth, just as market capitalization rose by N82.98bn to N11.93tr, from N11.83tr, representing a 0.70%, value appreciation.

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Thursday’s upturn followed gains by low, medium and high cap stocks like: Dangote Cement, Nigerian Breweries, Dangote Flourmill, Fidelity Bank, Zenith Bank, FBNH and Honeywell. This impacted positively on Year-to-Date negative returns that contracted to 14.59%,and market capitalization to N1.60 trillion, representing a 12.32% drop, from the opening value.

Bearish Sector Performance
All sectorial indexes were largely bearish, except for the NSE Industrial Goods that closed green with 1.74%. Market breadth was negative as decliners outpaced advancers in the ratio of 23:13, to reverse the previous bear market
Market activity were mixed as volume was down by 27.89% to 173.63m shares from midweek’s 240.76m units, while value rose marginally by 2.79% to N3.76bn from N3.66bn. Transactions were boosted by financial services stocks like: GTBank, Zenith Bank, FBNH, UBA and ETI.
Law Union & Rock Insurance and Prestige Assurance were the best performing stocks, chalking 6.33% and 6.12% respectively to close at N0.50 and N0.52 per share, on the impact of market forces. On the flip side, Vitafoam and C/I Leasing lost 10% and 9.67% respectively, closing at N3.15 and N2.71 each on profit booking.

Market Outlook
Being the last trading day of the week expect the up and down movement to continue as more companies present their numbers in the coming days, amidst increased bargain hunting activities, while volatility and profit taking continue, if the numbers beat market and analysts forecast.
The Q3 earnings reports currently being released to the market would assist investors and fund managers rebalance their portfolios, while watching the political space and analysing the actual numbers that will give insights into expectations for Q3 GDP and full year company earnings power. 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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