Market Update for May 5
Equity prices closed higher on the Nigerian Stock Exchange on Tuesday with the composite All-Share Index witnessing a breakout of the recent resistance level of 23,143.34 basis points on strong demand. This is an apparent approval by investors of the Federal Government’s decision to gradually ease the lockdown imposed in the aftermath of the spread of the Coronavirus (COVID-19) pandemic in the nation’s commercial centres of Lagos and Ogun, as well as the Federal Capital Territory (FCT).
On the global scene, there is also relaxation of the lockdown to allow for the resumption of manufacturing activities, a situation that has impacted oil prices positively, triggering optimism among investors, even as more companies release their 2019 full-year results and 2020Q1 numbers to the Nigerian Stock Exchange (NSE). We note that the numbers released have, however, been mixed.
The increasing buying interests in highly capitalized stocks have supported the positive market sentiments, extending the bull-run for the seventh successive trading sessions, despite profit-taking and unfavorable macroeconomic events like the ravaging pandemic which is fundamental and has disrupted economic order.
The changing market dynamics and patterns have further aligned the NSE with global markets on oil price movements and other factors, despite the virus-induced economic downturn.
Also, May is a dividend qualification month for many blue-chip stocks which have so far suffered losses before now but are now attracting funds and buying interests on high yields. Stocks in this category include MTNN, Dantoge Cement, Nestle Nigeria, Okomu Oil Palm, Julius Berger Zenith Bank, and Access Bank, among others. We advise investors not to be carried away by this trend but should fashion good exit strategies while investing with caution.
The All-Share Index (NSEASI), on Tuesday, showed more resilience, trading above its 50-Day-Moving-Average, and V-shaped recovery moves to break out the recent double top formation on a high buying pressure, crossing the blue line as predicted by Investdata analysts. But the Money Flow Index is gradually sliding down to indicate profit-taking.
Meanwhile, Tuesday’s trading started on the upside and was sustained throughout the session on a positive outlook, pushing the NSE’s benchmark index to an intraday high of 23,809.39bps, from a low of 23,075.49ps, before closing higher at 23,809.31ps on a high transaction volume to signal the beginning of markup and bullish sign.
Tuesday’s market technicals were positive and strong as volume traded was higher than the previous session, in the midst of positive breadth and strong buying sentiment as revealed by Investdata’s Daily Sentiment Report, showing a ‘buy’ volume of 100%. Total daily transaction volume index stood at 1.15, just as the impetus behind the day’s performance stayed strong with Money Flow Index reading 87.99 points, slightly down from the previous 88.52ps, indicating a strong market in the midst of funds exiting gradually.

Index and Market Caps
At the close of the day’s trading, the major performance index gained a strong 719.45bps, closing at 23,809.31ps, from the opening level of 23,089.86bps, representing a 3.12% growth, while market capitalization rose significantly by N374.94bn to close at N12.41tr, from the opening value of N12.03tr, representing a 3.12% appreciation in investors’ portfolios.
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The day’s upturn was impacted by the demand for medium and high-cap stocks, which impacted positively on the benchmark index, reducing its Year-To-Date loss to 11.30%, while market capitalization YTD decline stood at N520.08bn, representing a 4.25% drop from the year’s opening level.

Bullish Sector Indices
Performance across sectors was largely bullish except for the NSE Insurance that closed 0.32% down, while the NSE Banking and Consumer Goods led the advancers after gaining 2.42% each, followed by the NSE Industrial Goods and Oil/Gas indexes which closed 1.56%, and 0.73% up respectively.
Market breadth, turned positive as advancers outpaced decliners in the ratio of 29:8, while market activity in terms of volume and value was down by 38.15% and 77.08% respectively, with investors trading 345.18m shares worth N4.25bn, as against the previous day’s 249.86m units valued at N2.4bn. The day’s volume was boosted by trades in Guaranty Trust Bank, FBNH, UBA, Zenith Bank and Access Bank.
Dangote Cement and Neimeth Pharm were the best-performing stocks, gaining 10% and 9.26% respectively while closing at N143.00 and N0.59 per share on the dividend qualification and market forces. On the flip side, May & Baker and NPF Microfinance lost 10% and 9.60% respectively, closing at N2.43 and N1.13 per share respectively, on profit-taking.

Market Outlook
We expect profit-taking in the midst of fresh positioning as players target dividend-paying stocks, ahead of their qualification dates while expecting more corporate earnings, even as the NSE index breaks out the recent resistance level in the course of recovery. This is coming ahead of the 2020Q1 GDP, even as MFI reveals that smart money participation is slowing down as the lockdown is gradually being eased, despite the face of rising virus spread and oscillating oil prices after the crash.
However, the market’s high dividend yield continues to attract buying interests, while more audited corporate earnings hit the market, going forward, despite the likely continuation of selloffs, with investors buying to increase their positions in undervalued stocks ahead of dividend declaration and Q1 numbers. This is also against the backdrop of the fact that the capital wave in the financial market may persist in the midst of relatively low-interest rates in the money market, high inflation, and unstable economic outlook for 2020.
Also, investors and traders are positioning amidst the changing sentiments in the hope of improved liquidity and positive economic indices which may reverse the current trend. We see investors focusing on the upcoming full-year earnings season, targeting companies with strong potential to grow their dividend on the strength of their earnings capacity.
Again, the current undervalue state of the market offers investors opportunities to position for the short, medium and long-term, which is why investors should target fundamentally sound, and dividend-paying stocks for possible capital appreciation in the New Year.
This was noted in the 10 golden stocks and trading ideas for 2020, as discussed extensively during the Investdata 2020 Traders & Investors Summit held in Lagos.
Also, traders and investors need to change their strategies, because of the NSE’s pricing methodology, the CBN directives, and their impact on the economy in the nearest future.
NB: The home study packs of our Invest 2020 Opportunities and Trade Ideas Summit, containing different Stocks for various investment objectives in 2020 and beyond are available. To obtain your pack send ‘Yes’ or ‘Stock’ to 08028164085, 08032055467, 08111811223 now.

Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
amberose.o@investdataonline.com
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Tel: 08028164085, 0803205546