Market Update for May 17
Monday’s trading on the Nigerian Exchange was yet another very volatile and mixed session, even as the week opened on a negative note, after profit taking hit both high cap and low priced stocks, especially those that rallied recently on market reactions to their numbers.
This profit booking halted the four successive sessions of bull transition, despite the seeming mixed economic data as the nation’s Consumer Price Index for April slowed down for the first time since August 2019, to 18.12%, from the previous month’s 18.17%.
Added this marginal slide in inflation rate, is the expected Q1 GDP 2021 growth trend sustained from the Q4 2020 GDP, following which members of the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) may vote to retain interest rates at their next meeting. This is to allow them watch how the economy will fare before the committee’s next meeting at the end of July.
With the market likely to be impacted by economic data and repositioning of portfolios on the strength of corporate earnings ahead of the half-year results in July, it is important for traders and investors to target companies with earnings growth, quality and value that can match Investdata’s Earnings Gauges.
It is time, therefore, to invest wisely, guided by investment goals, especially entry and exit strategies necessary to ensure they not only survive, but profit from the expected new trend. Be guided also by current price patterns and money flow index now supporting a trend continuation as funds flow in and out of the market.
Meanwhile, Monday’s trading opened slightly on the downside due to profit taking in highly capitalized stocks, alongside position taking, following which the market oscillated to pullback the NGX All-Share index to an intraday low of 39,303.31 basis points. Before then, it had attained a highs of 39,483,511bps, before closing below its opening level at 39,307.19bps.
Market technicals were mixed and positive, with higher volume traded than previous day’s in the midst of breadth that favoured the bulls on a high selling pressure, as revealed by Investdata’s Sentiments Report showing 98% ‘sell’ volume and 2% positivel position. Total transaction volume index stood at 1.23 points, just as the momentum behind the day’s performance was relatively strong with Money Flow Index looking down to read 57.28pts, from the previous day’s 64.40pts, indicating that funds left the market on a daily chart while looking up on a weekly to signal entrance of funds.
Index and Market Caps
The benchmark index at the end of the Monday’s trading shed 174.70bps, closing at 39,307.19bps from an opening figure of 39,481.89as representing a 0.44% decline, just as market capitalization lost N91.43bn, closing at N20.49tr, from an opening value of N20.58tr, also representing a 0.44% value loss.
Attention: If you have not signed up for Investdata buy and sell signal setup, don’t delay. We have just reduced to 8 STOCKS TO WATCH THAT ARE BUILDING NEW BULLISH BASE in our watchlist. These stocks are with double potentials to rally considering their current and oscillating mood of the market value.
To become a member, send ‘YES’ or ‘STOCKS’ to the phone numbers below. Take advantage of this service to buy right and sell right at the current oscillating market in the midst of earnings season, portfolio reshuffling and repositioning as we await an economic reform policy to stimulate and re-track the economy again.
Monday’s downturn resulted from profit booking in MTNN, BUA Cement, Lafarge Africa, Africa Prudential, Access Bank, Guaranty Trust Bank, Dangote Sugar, Guinness, and Stanbic IBTC, among others. This impacted negatively on Year-To-Date loss, increasing it to 2.39%, while the cut in market capitalization YTD deepened to N574.43bn, representing a 2.09% below its opening value for the year.
Bearish Sector Indices
Performance indexes across the sectors were down, except for the NGX Oil/Gas that closed 0.21% higher, while Industrial Goods led the decliners after losing 0.66%, followed by Banking, Insurance and Consumer goods with 0.59%, 0.29% and 0.07% lower respectively.
Market breadth remained positive, as advancers outnumbered decliners in the ratio of 22:14; just as activities in volume and value terms closed 63% and 22% lower respectively, as investors exchanged 357.69m shares worth N3.56bn, boosted by trades in Zenith Bank, FBNH, NEM Insurance, Sovereign Trust Assurance and Fidelity Bank.
Eterna and Royal Exchange Insurance were the best performing stocks, gaining 9.85% and 9.21% respectively, closing at N7.25 and N0.34 per share respectively on impressive Q1 reports and market forces. On the flip side, Enamelware and Africa Prudential lost 9.80% and 6.80% respectively, closing at N17.95 and N6.05 per share, on selloffs and profit booking.
Market Outlook
We expect the mixed trend to continue on profit taking and repositioning, in the midst of April inflation rate and outcome of MPC meeting next week, despite the rising infection rate of the novel coronavirus across the globe and the high yields in the fixed income market. We also expect economic data like the 2021Q1 GDP report, April Purchasing Managers’ Index and inflation among others to reveal the state of the economy and give direction. The banking sector remains attractive on the back of the prevailing low prices, despite the Q1 mixed numbers.
Also, the market just started a new uptrend as it trades above the 14 and 20-Day Moving Average. Note that the market may discount the political and insecurity challenges, ahead of economic reports.
However, the pullbacks offer bargain hunters and income investors fresh opportunities to reposition in high dividend yields and undervalued stocks, while looking out for quarterly numbers that would support recovery. This is based on the fact that the rising fixed income yields may not be enough to scare all investors away from the equity market.
Again, the way to go is: Target dividend-paying stocks and fundamentally sound companies with growth prospects in 2021, looking the way of mispriced equities. This is especially given the rising oil prices that have so far supported the economy and equity market, despite the seeming improvement in the fixed income yield which had remained at negative real rate of return due to the subsisting high inflation.
However, the strong and faster recovery may continue, depending on market forces, going forward, as propelled by 2020 full numbers and expected 2021 Q1 earnings reports, until the next MPC meeting in May.
The NSE’s index action and indicators are heading in the same direction on a low traded volume and positive buying sentiments in the midst of rising yield in bond and TB.
Also, the current undervalued 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.
Meanwhile, the home study packs onComprehensive Stock Mark Trading videos, INVEST 2021 New Opportunities & New Paths To Profits Summit materials and 10 Golden Stocks for 2021, Strategies and How to invest profitably in this Changing Market Dynamics/ Recession, Mastering Earnings Season For Profitable Investing and Trading in any market situation/ cycles, Life Beyond COVID 19 Investment Opportunities In The Stock Market are now available. To obtain your pack send ‘Yes’ or ‘Stock’ to 08028164085, 08179547605, 08111811223 now.
Ambrose Omordion
CRO|Investdata Consulting Ltd
ambrose.o@investdataonline.com
Tel: 08028164085, 08032055467
