NSE Indicators Remain Red Amidst Caution, Uncertainty Among Investors

Market Update for October 23

Nigeria’s stock market suffered another loss on Monday to kick start the last full week of October and the peak of the third quarter earnings reporting season, which has so far failed to fuel stock prices despite financials that beat expectations which may not be divorced from the fact that many market players lack the funds needed to trade the season. This reflected in the decline in participation by domestic players who hold 34.94% stake in the market, whereas foreign investors’ stake has risen in September to 65.06%. We all know foreign investors are selective and play in few stocks, besides the fact that they do not just increase their position or sell down until proper analysis of the latest numbers are carried out.
This is why we believe value investors and traders in strong and fundamentally sound companies should not rush for the exit door in panic, but adjust their waiting period and keep their eyes on technical indicators and tools to know when to accumulate more or exit position for protection of their capital.
Trading started on the downside, breaking down the intraday psychological line of 36,000 point before retracing back from the day low of 35,825.05 before closing lower 36,411.73 as sentiment turned positive by midday with the candlestick formation signaling reversal of trend which market forces today will confirm. Despite the fact that it was a loss across board, there are gradual increase in demand for stocks as volume traded increased as revealed by the stronger buying pressure with volume index of 1.05 for the day, while buying position was at 76% and 24% selling volume of the day’s transaction, to continue the bear transition while the market awaits fresh funds and higher demand for equity to change the current momentum. Also, more impressive earnings were presented to investors from Fidelity Bank, National Salt, Africa Prudential, Caverton and others on Monday.
Meanwhile, the composite NSE All-Share Index shed 175.58 basis points up to close at 36,411.73 from 36,587.31 points, which represented a 0.48% decline. In the same direction, market capitalisation lost N60.43bn to close at N12.53tr, from the previous session’s N12.59tr, representing 0.48% depreciation in investors’ position.
The downturn in the share prices of Lafarge Africa , Presco, , Dangote Sugar, Nascon, Guiness, NB, Nestle, Stanbic IBTC and Cutix impacted negatively on the ASI’s year-to-date return, which reduced to 35.49%, just as market capitalisation notched N3.29tr YTD, representing a 35.54% rise above the year’s opening value.
Market breadth for the day was negative with the number of decliners exceeding advancers in the ratio of 25:16 on a volume traded that was higher than previous day’s level to continue the down market.
Market activities for the day, in terms of volume and value, were up by 137.96% and 43.35% respectively to 253.54m shares, valued at N2.7bn from the previous day’s 106.52m units valued at N1.9bn.
Transactions in the shares of Access Bank, FBNH, Transcorp, Fidelity Bank and Zenith Bank topped the volume chart.
At the close of Monday’s trading, International Breweries topped the advancers’ log, chalking 10.23%, to close at N56.23 per share, on merger agreement recently reached by shareholders, which is now awaiting the approval of the Securities & Exchange Commission (SEC) to complete the deal. It was followed by Redstar Express 4.84%, which announced its primary market activities by way of right issue, closed at N4.98 per share, besides the high hopes for its Q2 numbers.
On the flipside, Lafarge Africa lost 9.75% to close at N50.54 on profit taking activities and its seeming unimpressive numbers that showed a high gearing situation, followed by Cutix, which shed 9.62% to close at N2.35 per unit on profit booking after the markdown for dividend.
Also, during the trading session, Seplat and RT Briesco made their Q3 earnings available to the market.

As the market opens this morning, volatility may continue in the midst of repositioning and profit taking, being the peak week for earnings reporting season, as more companies are expected to release their quarterly results.
One thing that is clear in the current market situation is that smart investors are accumulating and enhancing their positions in selected stocks.
Again, we advise that investors allow numbers to guide their decisions while repositioning for the rest of the year trading activities, especially now that prices of stocks are looking down amidst improving economic and market fundamentals.
It is time to use your technical tools to take decision by knowing the support and resistant level to reposition or exit any position. Market is in phases know it in order to manage your trading and investing risk. For stocks that should be on your shopping list to buy in this oscillating market or pullbacks sign up to INVESTDATA BUY AND SELL signal setup by calling 08032055467.
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