Nigerian Bourse Sheds 2.48% In Three Days, Amidst Bear Transition

Market Update Jan 5

The bearish spirit with which trading on the Nigerian Stock Exchange started the New Year continues as selling pressure persists due to what is popularly referred to as the January effect which follows the long month of festivities, holidays and the reality of investors having to pay school fees.
In this week’s buy and sell volume index that reveals the market’s bearish sentiment, especially with today’s selling volume of 100%, meaning a buying volume of 0%, an indication that investors are exiting positions whether loss or profit, just to meet immediate needs.
The positive Purchasing Managers Index (PMI) for the month of December released on Tuesday, the first working day of the year, after 11 months of negative growth, is indeed a sign that normalcy is gradually returning to a sector, whose indicators had been in the red for most of last year.
This notwithstanding, the three trading sessions of bear transition so far has created opportunities for discerning investors and traders to buy value imbued and dividend paying stocks in stages.
At the close of Thursday’s trading session, the composite index NSE All Share index shed 717.05 points to close lower at 26,212.09 points, from an opening figure of 26,495.04 points, representing a 1.07% decline, on a low volume of trades to remain on a bear run of third trading sessions.
Similarly, market capitalisation for today closed lower at N9.02 trillion from an opening value of N9.12 trillion representing a 1.07% decline
The continued drop in equity prices have pushed the NSEASI’s year-to-date negative position to 2.48%, just as capitalisation adjusted lower.
Market breadth for the day turned marginally positive as the number of advancers outpaced declines in the ratio of 17:16 on a mixed sentiment

Volume of trades was down by 77% to 137.69 million shares worth N898.71 million, compared with the previous session’s 606.12 million units. Transaction value was also down to N898.71billion, representing a 25.11% decrease from the previous trading day’s level of N1.20 billion.
Transactions in the shares of FIDELITY BANK, DIAMOND, UCap, Transcorp and UBA topped the activity chart as most traded equities by volume
At the end of the day trading, UACN Property led the advancers table with +7.29% gain to close at N3.09 while on the decliners side, Nacho came tops with a -9.40% loss to close at N2.86 per share.

The NSEASI on a daily time frame continues a downward trend as it recently pulled back after forming a double top that supports the current trend on a low volume of trade.
The index rebounded in December but was still within the bearish channel. The moving trend is likely to break down the dotted line in today’s trading session, if there is no positive information.
But there may be a little reversal amidst positive market forces. Investors can equally wait for the pullback to reverse before jumping into the market to take fresh positions.
NSEASI DAILY TIME FRAME
Is seen in the chart above, the trending ability of the market on a daily time frame is strong as ADX is above 20. The probability of the market remaining in this direction for the next two week is high.
Traders should allow the correction to finish if they are to know the direction of the market.

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