Market Update for June 13, 2018
It was yet another interesting trading session on Nigeria’s equity market on Wednesday, as the two sessions of bull transition were halted following profit taking in medium and high cap stocks which had rallied since the recovery started last week. The late sell-off during the midday and afternoon session plunged the market into red after the day started out with a pop to the upside, testing resistance as it hit intraday high of 39,261.60 basis points from the lows of 39,031.72bps, before closing lower than it opened.
The latest rates hike in the U.S is likely to further dampen sentiments in emerging markets like Nigeria, but with the sustained upbeat in the nation’s macro-economic indices, such as the Consumer Price Index (CPI) for the month of May, with another slower growth rate at 11.61%, from preceding month’s 12.48%, closer to the target single-digit range expected by the Central Bank of Nigeria (CBN).
The sustained drop in the inflation rate for the 16th consecutive month is expected to continue pilling pressure on CBN’s Monetary Policy Committee (MPC) to cut its benchmark Monetary Policy Rate (MPR) so as to boost economic activities and encourage greater investment as a result of relatively cheaper funds for expansion. The pro-growth policies and reforms of the government should further boost the recovery and strengthen economic fundamentals, ahead of next week’s signing of the 2018 Appropriation Bill by President Muhammadu Buhari.
Market technicals on Wednesday were negative and weak, even as traded volume was higher in the midst of negative market breadth and high selling interests, while traders took profit from the recent rally.
Investdata Daily Sentiment Report revealed that buying pressure was at 100% and selling volume, 0% on a volume index of 1.37 of the day’s total transactions.
At the midweek’s session, the energy behind the selling sentiment for the day as reflected in the money flow index stood at 29.75 points, slightly lower than previous day’s 30.84 points. This is an indication that funds exited the market as at close of business, as traders sold off their position in medium and high cap stocks to cash out short-term profit, while investors are expected to take advantage of the pullback to position for dividend as release dates for March year-end accounts draw closer.
Index and Market Cap
The All-Share index on Wednesday nosedived by 135.32 basis points to close at 39,031.72bps, after opening at 39,167.04bps, representing a 0.35% decline on a high volume that was higher than the previous day’s. Similarly, market capitalisation slipped by N49.02bn to close at N14.14tr from an opening value of N14.19tr, which also represented 0.35% value loss.
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The downturn recorded at the midweek resulted from price depreciation in stocks like Nigerian Breweries, Zenith Bank, UBA, FBNH, Stanbic IBTC, Dangote Flour, Oando, Diamond Bank, and Unity Bank. These impacted negatively on the NSE’s Year-to-Date return, which contracted to 2.06%; while market capitalisation gain for the period stood at N529.79bn, representing 3.90% above the year’s opening value.
Mixed Sector Performance
Sectorial performance across board was largely bearish except for the NSE Industrial and Oil/Gas that were in green on the back of value gain recorded by CCNN and Eterna, while Others sectoral indexes closed in the red same as the general market as Nigerian Breweries, Dangote Sugar, Dangote Flour, Zenith Bank, FBNH, UBA, NEM, Aiico and Wapic Insurance that suffered losses at the end of the trading session.
Market breadth for the day was negative as decliners outpaced advancers in the ratio of 22:20 to halt the two-day up market.
Market activities were mixed as volume improved by 33.68% to 456.49m shares from the previous day’s 341.48m units, while value was down by 20.4% at N4.13bn from the previous day’s N5.19bn. The day’s volume was boosted by trading in financial services stocks like UBA, United Capital, Africa Prudential, Access Bank and Africa Alliance Insurance that witnessed increased trading to top the activity chart.
Japaul Oil and UACN Property were the best performing stocks, topping the advancers’ table, with 5.9% and 5% respectively to close at N0.36 and N2.11 each. This was as a result of pure market sentiment and forces.
On the flip side, Diamond Bank and Aiico Insurance were the worst performing, losing 5% and 4.6% respectively to close at N1.52 and N0.62 on short term profit taking.
Market Outlook
We expect profit taking to continue being the last trading day of the week, ahead of the forthcoming long holiday. Volatility is likely to continue as investors and other players reposition for March full-and half year earning season as equities remain undervalued with higher yields. Investors should review their position in line with their investment goals and take action as events as it unfolds in the global and domestic environment.
However, we would like to reiterate our advice that investors should go for equities with intrinsic value, especially during this season were less earnings are released ahead of march full year earnings release and Q2 interim dividend payment are expected in the market arena very soon.
We advise investors to allow numbers guide their decisions while repositioning in any stock, 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. A stock market is in cycles. You must know the cycle it, or particular stocks therein are to successfully manage your trading and investment risk. For stocks that should be on your shopping list to buy in these seasonal changes as the year unfolds, sign up to INVESTDATA BUY AND SELL signal setup by calling 08032055467.
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Comprehensive training materials on stock Trading and Investing for Financial Independence series are Available, you can play and watch on your mobile phone, laptop, desktop and TV set. Kindly call or send yes to 08032055467, 08028164086 or 08111811223.
Ambrose Omordion
CRO|Investdata Consulting Ltd
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Tel: 08028164085, 08032055467
