Market Update for June 21, 2018
Nigeria’s stock market on Thursday had another bearish and difficult session that turned the benchmark indicators red year-to-date at 0.24% as the bear-run extended to day five on a huge loss in the recent pullbacks.
The day started out with a little gap up in the early morning before falling apart between mid-morning to afternoon on a fast drop due to price depreciation of highly capitalized stocks which broke down the recent support level of 38,408.26 basis points amid strong selling pressure that made the market remain dicey and volatile. The market also broke down the lower line of the falling channel after touching intraday lows of 38,093.16bps from its high of 38,606.97bps and rebounding marginally in the last few minutes to the end of trading at 38,152.60bps.
The fear that OPEC may ignore attempts by U.S President Donald Trump to force oil price down has triggered a sell-off as investors sort safety, knowing that when oil price continues to rally there is a possibility for stock prices to go down. This follows the positive outlook of the US economy as a result of fiscal stimulus that may become threatened.
In Nigeria, economic recovery so far has supported the upbeat macro-economic indices that would likely reflect in the performance companies traded on the exchange as we expect their numbers to start rolling in any moment from now, specially the March year end account.
Market technicals were negative and weak as traded volume was low in the midst of negative market breadth and sentiments, with Investdata’s Daily Sentiment Report showing ‘sell’ pressure of 88% and ‘buy’ volume, 12% on a volume index of 0.80 of the day’s total transactions.
The momentum behind the sell sentiment for the day reflected in the money flow index at 29.03points from the previous day’s 28.63 points, which is an indication that funds are waiting for direction, despite the selloff among traders in medium and high cap stocks.
Index and Market Cap
Thursday’s trading closed with the NSE All share index shedding 452.478bps at 38,152.60bps, after opening at 38,605.07bps, representing a 1.17% decline on a low volume that was slightly higher than the previous day’s. Similarly, market capitalisation fell by N163.91bn to close at N13.82tr from an opening value of N13.98tr, which also represented 1.17% value loss to deepen investors negative position.
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The downturn was due to losses suffered by high cap stocks like Dangote Cement Seplat, Guaranty Trust Bank, FBNH, Dangote Sugar, Oando Zenith Bank, PZ, UBA and Honeywell Flour, which impacted negatively on the NSE’s Year-to-Date return that turns red at 0.24%. The gain in market capitalisation for the period stood at N234.31 billion, representing 1.09% above the year’s opening value, on the impact of new listings earlier in the year.
Bearish Sector Performance
Sectorial performance for the day was bearish, as NSE Oil/Gas, Banking and Industrial closed lower due to continue profit taking from Seplat, Eterna, GTBank, Zenith Bnak and Dangote Cement, while NSE Consumer goods and insurance indices were up as a result of price gains in Custodian, Mansard and NB.
Market breadth for the day was negative as decliners outnumbered advancers in the ratio of 26:24 to continue the five-days down market.
Market activities were up in volume and value by 1.36% and 7.2% respectively to 2714m shares worth N4.10bn from the previous day’s 267.76m units valued at N383. The day’s volume was boosted by trading in financial services stocks like FBNH, Fidelity Bank, GTBank Sterling Bank and Prestige Assurance that witnessed increased trading to top the activity chart.
Japaul Oil and Custodian Investment Plc were the best performing stocks for the day that topped the advancers’ table, with 9.3% and 5% respectively to close at N0.47and N5.25 each. This was as a result of market sentiment and expected interim dividend.
On the flip side, Honeywell and Nahco were the worst performing, losing 5% each to close at N2.28 and N3.99 on profit taking and market forces.
We expect profit booking to continue being last trading day of the week, but with our eye fixed on March account earnings reports that will start to hit the market next week. Volatility is likely to continue as investors and fund managers reposition for end of the quarter to earn good fee and commission as equities remain undervalued with higher yields. Investors should review their position in line with their investment goals and take action as events as it unfolds in the global and domestic environment.
However, we would like to reiterate our advice that investors should go for equities with intrinsic value, especially during this season were less earnings are released ahead of march full year earnings release and Q2 interim dividend payment are expected in the market arena very soon.
We advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst improving company, economic and market fundamentals.
It is time to combine fundamentals and technical tools to take decision by knowing the support and resistant level to reposition or exit any position. A stock market is in cycles. You must know the cycle it, or particular stocks therein are to successfully manage your trading and investment risk. For stocks that should be on your shopping list to buy in these seasonal changes as the year unfolds, sign up to INVESTDATA BUY AND SELL signal setup by calling 08032055467.
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