Market Update for March 16, 2020
Monday’s trading activities on the Nigerian Stock Exchange remained volatile and mixed with the benchmark All Share index closing red again, thereby halting the previous day’s marginal gain, amidst global fears as the coronavirus scourge fuels the bear market, resulting in the seeming bargain hunting across financial stocks.
The mixed sentiment during the trading session failed to lift the market as selloffs continued among high cap stocks, irrespective of news of another set of proactive measures by the Central Bank of Nigeria to cut interest rates on its intervention funds from 9% to 5% in the face of the challenging business environment (READ MORE).
Sell pressure subsided on the NSE during the Monday session, even as the Federal Government announced plans to cut the size of the 2020 budget while concentrating only on essential capital spending to the heavy crash of crude oil price (READ MORE).
Meanwhile, Monday’s trading started on the upside slightly in the morning and was sustained till midday before oscillating in the afternoon on mixed sentiment with buying interests in banking and insurance stocks. Selloffs, however, hit high cap stocks, pushing the NSE’s benchmark ASI to an intraday low of 22,618.36basis points, from its high of 22,797.39bps, before retracing up slightly. It closed at 22,705.19bps lower than it opened.
Market technicals were positive and mixed with volume traded lower than that of the previous sessions in the midst of breadth that favoured the bulls on mixed sentiments as revealed by Investdata’s Sentiment Report showing 52% ‘sell’ volume and 48% ‘buy’ position. The total transaction volume index stood at 1.44 points, just as the momentum behind the day’s performance remains weak, despite looking up as Money Flow Index reads 23.19points, from the previous day’s 16.85points. This is an indication that funds entered some stocks despite the down market, in the midst of prevailing low liquidity.
Index and Market Caps
The NSEASI, at the close of Monday day’s trading, shed a marginal 28.16bps, closing at 23,705.19bps, from its opening figure of 23,733.35bps which represented a 0.10% drop, just as market capitalization lost N15.05bn, closing at N11.83tr, from the N11.85tr opening value, which also represented 0.10% value loss.
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Monday’s downturn was impacted by continued selloffs in medium and high cap stocks like MTNN, FBNH, Lafarge Africa, UBA, NB, Dangote Sugar, and Fidelity Bank. This expectedly impacted mildly on the NSE, as Year-To-Date loss increased to 15.41%, while market capitalization YTD negative position stood at N1.13tr, representing an 8.67% decline over the year’s opening value.
Mixed Sector Indices
The sectorial performance indexes were largely bearish, except for NSE Insurance and Banking that closed higher by 1.51% and 0.63% respectively, while NSE Industrial Goods led the decliners, after losing 0.52%, followed by the NSE Consumer Goods with 0.16% decline, while NSE Oil/Gas was flat for the session.
Market breadth was positive as advancers outnumbered decliners in the ratio of 18:14, while market activities in terms of volume and value traded were down by 24.78% and 43.66% as investors traded 551.48m shares worth N5.76bn, from the previous day’s 724.61m units valued at N9.12bn. Volume was boosted by trades in Guaranty Trust Bank, Zenith Bank, FBNH, Access Bank and UBA.
The best-performing stocks for the session were Courtville Business Solution and Lasaco Assurance as they topped the advancers table, gaining 10% each, closing at N0.22 and N0.22 per share on market forces. On the flip side, Transcorp and Sky Aviation lost 10% and 9.73% respectively, closing at N0.63 and N2.32 respectively on sell down and profit-taking.
We expect a mixed performance and slowdown on the losing momentum as February inflation data is expected to hit the market on Tuesday, low prices of stocks and high dividend yields attract buying interest, as more audited corporate earnings hit the market, going forward. This is despite the likely continuation of the mixed intraday movement in the midst of selloffs, with investors buying increasing positions in undervalued stocks ahead of dividend declaration. 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 in anticipation of the 2019 full-year earnings reports, 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.
Meanwhile, the home study packs of our Invest 2020 Opportunities and Trade Ideas Summit, containing the 10 Golden Stocks for 2020 are available. To obtain your pack send ‘Yes’ or ‘Stock’ to 08028164085, 08032055467, 08111811223 now.
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08032055467