Reversal Imminent As Investors Seek Signs Of Market Bottom On NGSE

Market Update for July 4, 2018

It looks like the bear dominance in the last three trading sessions is slowing down on improved positive sentiments attributed to low price attraction as bargain hunters take advantage of the current situation in the market to strategically position for the expected Q2 numbers, economic data and implementation of the budget. This is considering the approval of N13.45bn and N11.72bn by the Federal Executive Council for exploration and construction of roads to the new Niger bridge ahead in the eastern part of Nigeria.

The midweek trading session opened on a gap downside in the morning which lasted till midday before retracing marginally up by afternoon as buying sentiment for high and medium cap stocks looked up after touching intraday lows of 37,445.76 basis points from highs of 37,611.68bps. It finally closed the day at 37,499.07 points to remain under the 20-Day Moving Average and bearish channel.

The market at this point looks good to position for medium and long term, however, many investors are waiting to identify the bottom before jumping in, which may trigger reversal any moment from now.

Market technicals at the end of midweek’s trading were negative and mixed as  traded volume was high in the midst of negative market breadth and  improved sentiments, as revealed  by Investdata’s Daily Sentiment Report showing a ‘sell’ pressure of 68% and ‘buy’ volume of 32% on a volume index of 1.13 of the day’s total transactions.

Despite the seemingly improved sentiment, energy behind the market’s performance weaked further, as reflected on the money flow index at 16.14 points from the previous day’s 22.26 points, an indication that funds are still leaving the market.

Index and Market Cap                                      

The All Share index at end of midweek trading  shed  105.05bps, closing at 37,499.07bps, after opening at 37,66.23bps, representing a 0.28% decline on a high volume that was higher than the previous day’s. Similarly, market capitalisation dropped by N38.42bn to close N13.58tr from an opening value of N13.62tr representing 0.28% value loss.

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The downturn recorded on Wednesday was due to losses suffered across board, like Forte Oil, Unilever, UBN, NB, Guinness, Lafarge Africaa, Access Bank and Dangote Sugar. These impacted negatively on the NSE’s Year-to-Date return, pushing it further down to 1.95%, while market capitalisation loss for the period stood at N25.41 billion, a 0.19% rise below the year’s opening value, on the impact of selloffs. .

Bearish Sector Performance

Sectorial performance remained bearish for the day, except for the NSE Banking that was slightly up, while the NSE Insurance, Oil/Gas, Industrial and Consumer goods were down. Market breadth was negative as decliners outnumbered advancers in the ratio of 24:21 to continue its three day down market.

Market activities were up in volume and value by 96.49% and 18.08% respectively at 505.6mshares worth N3.13bn, from the previous day’s 257.39m units valued at N2.65bn. The day’s volume was boosted by trading in financial services, industrial, transport stocks like Multiverse, Nacho, Guaranty Trust Bank, Access Bank and FCMB that witnessed increased trading to top the activity chart.

The best performing stocks for the day were May & Baker and FCMB   that topped the advancers’ table, with 9.76% and 9.62% respectively to close at N2.25and N2.28 each, due to market force and low-price attraction.

On the flip side, Mcnihols and Forte Oll were the worst performing, losing 10.00% each to close at N0.81 and N26.10 on market forces

Market Outlook

We expect the sell-offs to slowdown as lower prices attracts new positioning ,while volatility continue ahead of Q2 earnings season since 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.

Save The Date: Investdata Stock Market Training Workshop

                                 On Saturday, July 28, 2018

Theme- Comprehensive Stock Trading & Investing Toolkit for Rest of 2018

Sub Topics

Review of 2018H1 Market & Economic Performance:  How Fiscal Reforms and Stimulus Will Support the Market/Economy in 2018H2.

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2018H2 Trading Checklist: How to Find Winning Stocks in Nigeria’s Volatile Equity Market

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Kindly call or send yes to 08032055467, 08028164086 or 08111811223.

Ambrose Omordion

CRO|Investdata Consulting Ltd

Tel: 08028164085, 08032055467