Market Update for November 8, 2018
As the investing public continues to digest the latest corporate earnings reports, low liquidity lingers, propelling instability on the Nigerian Stock Exchange (NSE), added to political risks associated with the 2019 general elections that is just around the corner.
The up and down movement of the Exchange’s indicators shows the state of indecision among players as portfolio reshuffling and balancing persisted on Thursday, closing positive, while it appears there was consolidation that reversed previous day’s negative sentiments on recent market traded average volume.
The NSE composite index opened on a slight downside in the morning, a situation that was reversed at mid-morning as highly capitalized stocks rallied till midday to afternoon, to test the first recent resistance level. It then pulled back on profit taking, after touching intraday highs of 32,246.75 basis points, from a low of 32,103.41bps to finish the session at 32,228.5bps on a positive market breadth.
Things appear to be looking better, judging by Investdata’s trend analysis of the NSE Banking index which is currently trading above its 50-Day Moving Average, the RSI has been above 50 over the past week, while others had remain in their oversold region. The mild improvement in the sector’s performance as revealed by the Q3 numbers, even as Non-Performing Loan ratio among banks dropped from 14.75% in 2017 to 12.45%, as contained in recent reports from the Central Bank of Nigeria (CBN). The possibility of dividend payout from the sector players is high, considering their earnings power and relatively low prices as shown by their low Price to Earnings ratio of below 12.15x.
Thursday’s market technicals were positive and mixed with relative low volume traded, compared to the previous day’s transactions, amidst positive market breadth and strong buying sentiments as revealed by Investdata’s Daily Sentiment Report, which shows a buy position of 87% and sell volume of 13%. The volume index for the day’s total transactions was 0.86.
The momentum behind the day’s market performance were flat despite the buying interest in medium and high cap stocks. Money flow index for the session decline slightly to 54.10bps, from previous day’s 54.30ps, indicating that funds are leaving some stocks to others as repositioning continued.
Index and Market Cap
The All Share Index on Thursday gained 120.20bps, closing at 32,228.50bps, after opening at 32,108.30bps, representing 0.37% growth, just as market capitalization was up by N43.88bn, closing at N11.77tr, from an opening value of N11.72tr, or 0.37% value gain.
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The upturn witnessed on Thursday followed price appreciation by high priced stocks like:Nestle, NB, Guaranty Trust Bank, Zenith Bank, FBNH, Fidelity Bank and Dangote Four. This impacted the Year-to-Date returns, reduce the loss position to 15.75%, while market capitalization decline reduced to N1.84tr since January, representing 13.55% drop, from the year’s opening value.
Mixed Sectors Indices
Sectorial performance was largely bullish, except for the NSE Industrial Goods and Oil/Gas that suffered losses on profit booking. Market breadth was positive with advancers outnumbering decliners in the ratio of 19:15, to halt the bear market.
Market activities in volume and value dropped by 55.56% and 71.46% respectively, to 200.13m shares worth N2.67bn, from previous day’s 459.14m units valued at N9.4bn. Transaction volume was boosted by financial service stocks like: Access Bank, FBNH, FCMB, Regency Insurance and Africa Prudential.
Unity Bank and UBN were the best performing stocks for the session, topping the advancers’ table, after chalking 9.28% and 8.16% respectively to close at N0.71 and N5.30 each on market sentiment and low price attractions. On the flip side, CCNN and PharmDeko lost 9.88% and 9.52% respectively to close at N18.25 and N1.52 each arising from their delayed Q3 numbers, and profit taking
Market Outlook
We expect profit taking today as the current oscillating trend to continue as investors digest company numbers, given that there is no new incentive for the market in November, unless and until there is a change in the narrative. Going by the timetable of the National Bureau of Statistics (NBS) released earlier in the year, the nation’s Q3 Gross Domestic Product (GDP) report is slated for release on Tuesday, November 27, same date as the Q3 capital importation report.
The ongoing volatility will persist as Q3 numbers assist investors and fund managers rebalance their portfolios, while watching the political space and ahead of the expected Q3 GDP and full year company earnings position. These are likely to drive prices north, or south, while determining market direction before or after Presidential Election.
Investors should review their positions in line with investment goals, strength of the company numbers and act as events unfold in the global and domestic environment.
However, we would like to reiterate our advice that investors should go for equities with intrinsic value,
We advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst mixed company, economic and market fundamental.
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CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467
