Nigerian Equities Stay Negative, Amid Selling Pressure Ahead Of Earnings Season

Market Update for February 6

Tuesday’s trading on the Nigerian Stock Exchange (NSE) remained negative to consolidate the ongoing correction wave, a seeming extension of the ongoing panic sell-off from the the developed market, which many had predicted and long awaited. The spill-over of Monday’s drop on the NSE resulted from the fear of another market crash, especially given investors’ harrowing experience between 2008 and 2009.
On the contrary, Investdata strongly believes that what is happening now, viewed from all facts and data available at our disposal, for which we stand to be corrected, is a market correction, as discerning investors take profit from the January to date rally, rather than a crash. It is perhaps the fear propelled by what is happening in the developed markets that has forced sentiments over the coming earnings season to the back seat in this few trading sessions of the week. With over 100 companies expected to release their 2017 full year results over the comings weeks, this fear may be misplaced, judging by their Q3 performance already released to the market.
In any case, the pull-back is an opportunity for investors to enter the stocks cheaper for more returns on investment. We therefore urge investors not to panic but search and identify stocks with underlying value, with dividend paying history or propensity to position after this pullback. It may seem that the back of the uptrend was broken with this correction, but it has created opportunities for a “buy market” with stock prices likely to bounce back in few days when the results start pouring in.
Back to Tuesday’s session, the benchmark All-Share index quickly gapped down at the opening session and was sustained up to the mid-morning and afternoon, before the losing momentum started reducing to breakdown the symmetrical triangle chart pattern, touching the 20-Day moving average, within the rising channel trend lines. The rest of the day was volatile to finish near the session lows. It was not a good close, technically speaking, as volume increased on a down market with negative breadth.
Market buying pressure for the day was 22% and selling position 78% of the total transaction, with volume index of 0.84 and money flow index 75.19 point looking down.
Meanwhile, trading closed with the benchmark index shedding 384.42 points to close at 43,877.30 basis points after opening at 44,261.72, representing a decline of 0.87% on a high traded volume that was higher than the previous day’s. Similarly, market capitalisation lost N137.75bn to close at N15.75tr, after opening at N15.88tr, which also represented 0.87% value loss.
The downturn sustained in the market resulted from value loss in medium and high cap stocks like NB, Lafarge Africa, UBA, Forte Oil, Dangote Flour, GTBank, Folumills, CCNN, Zenith Bank, FBNH, Access Bank, Julius Berger and International Brewery , which impacted negatively on the NSE’s Year-To-Date returns that fell to 14.73%, just as market capitalisation gain for the period reduced to N2.14tr, representing 15.70% YTD growth.
There was bloodbath as the composite index and all other sectorial indexes closed in red, except for NSE AseM that remained flat.
Market breadth was negative as the number of decliners widened to outpace advancers in the ratio of 50:18, to continue the two-day bear transition.
Market activities in volume and value terms for the day were up by 68.40% and 77.48% respectively to 717.15m shares worth N4.91, from previous day’s 426.87 million units valued at N2.77 billion.
Transaction volume for the day was considerably boosted by conglomerates and financial services stocks like LASACO, FCMB, Skye Bank, Transcorp and FBNH, which witness increased trading to top the activity chart as most traded.
The advancers table for the day were led by Prestige Assurance and Caverton, by gaining 7.69% and 6.92% to close at N0.56and N2.78 respectively, on market forces. Consolidated Hallmark Insurance and Skye Bank were the worst performing, shedding 9.09% and 8.89% to close at N0.40 and N1.23 each, on market forces.


Expect volatility and portfolio reshuffling/repositioning to continue, while selling pressure to reduce ahead of full year audited reports that will be in the market very soon, as revealed by the hanging man candlestick formation pattern as market close yesterday. But stay with value stocks as today trading confirm direction.
However, we would like to reiterate that investors should go for equities with intrinsic value, especially during this season that dividend payment is approaching.
We advise investors to allow numbers guide their decisions while repositioning for the rest of the year’s trading activities, 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. Market is in phases know the cycles in order to manage your trading and investing risk. For stocks that should be on your shopping list to buy in this seasonality changes as the year winds down, sign up to INVESTDATA BUY AND SELL signal setup by calling 08028164085.
Get your home study pack on INVEST 2018 Traders & Investors Summit and ride with the current recovery on Nigeria’s stock market and economy. By investing and trading knowledgeable. You can also still access stocks analysed in the home study pack of the INVEST 2018 traders & investors summit, which includes 15 stocks picks for 2018 are available now to guide your positioning as trading for the year just started.
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The workshop is scheduled as follows:
DATE: February 24. 2018
TIME: 10am – 3.00pm
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Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08032055467