Equities

NSE Market Update: Time to hold cash, as uncertainty continues

The Nigerian stock market’s benchmark index had a mixed performance during midweek’s trading session, opening early in the green before it succumbed to pressure and finally closing in the red to continue its bearish transition on a high selling volume propelled by profit booking and other market forces. Most affected were medium and highly capitalized equities that shed some weight during the session.
Also, despite the earnings season that is around corner, uncertainty continues to surround the Federal Government’s policy thrust and direction, especially with next week’s meeting of the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC). Investors are worried about the state of the economy and what is likely to be the outcome of that meeting as interest and inflation rates have skyrocketed. Add this to the unstable global economic outlook and the full picture becomes clearer.
Although, as if a seeming after-thought, Vice President Yemi Osinbajo, on Wednesday, assured that the newly-developed Economic Recovery Growth Plan of the Muhammadu Buhari administration has been designed specifically to take the country out of recession and in the long term continue to grow the economy.
Meanwhile, the composite NSE All-Share Index shed 32.86 points to close at 26,245.34, from after opening at 26,278.20, representing a decline of 0.13% on a high trading volume. Similarly, market capitalization lost N11.31 billion to close at N9.03 trillion from the opening value of N9.04 trillion, which equally represented 0.13% decline.
This further pushed the NSE’s ASI Year-to-Date negative returns to 2.34%, just like market capitalisation for the same period fell by N216.52 billion.
Market breadth for the day remained negative and weak as the number of decliners outpaced advancers in the ratio of 20:12 to continue the bearish run, just as the number of decliners increased on a high sell volume.
The volume of trade was up by 6.17% to 394.82 million shares from 371.82 million, while the value declined by 20% from N1.71 billion in the previous session to N1.38 billion. This was boosted by transactions in financial services sector stocks, especially Continental Reinsurance, Fidelity Bank, United Capital, Diamond Bank and UBA that topped the activity chart as most traded equities by volume.
The benchmark index and sectorial indices were all in the red, except the NSE Insurance that was in green while NSE Industrial Goods and NSE Asem were flat to close the day.
At the end of the day’s transactions, AG Leventies and Cutix led the advancers’ side, rising by 4.78% and 2.11% respectively to close at N0.88 and N1.45, while Guinness and Portland Paints led the decliners table with 5% loss each to close at N63.65 and N1.71 per share respectively.
This pullback is likely to continue in today’s trading session on profit taking unless there is a positive news or development to reverse the trend. Investors should always take advantage of pullbacks to reposition in value stocks, especially during this season that dividend payment is approaching.
NSEASI DAILY TIME FRAME
market update Jan 18
The index on a daily time frame continues its sideways ranging movement, trying to break out of the falling channel and symmetrical triangle chart pattern that supports continuation of trend, the increasing sell volume as at yesterday’s trading signals profit taking. The trend has broken the black line, which is to tell you as an investor or trader to hold cash and buy in stages on new support levels.
The trending ability of the market on a daily time frame is strong, as ADX is above 20, while the weekly is weak at ADX of 16.58. The index is below the 20Day moving average.
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Stocks To Watch
7UP, ETI, Total, Aiico, Fidelity Bank , Guinness and Presco

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