Market Update for September 19
Trading volatility on the floor of the Nigerian Stock Exchange continued on Tuesday as the market closed lower for the third consecutive day as cautious trading persisted with volumes traded which tracks behavioral pattern or sentiments of traders and investors lower than market average, especially in recent time. We have seen this pattern multiple times over the last few weeks.
Notice that within the past three trading sessions however, the market’s losing magnitude have been dropping with volume transacted gradually looking up as we expect increase in volume and volatility in the remaining days of the month, going into the last quarter of the year. Also, the market is anxiously awaiting the return of speculators by this month end ahead of Q3 earnings season in October and as well as the outcome of the Monetary Policy Committee (MPC) meeting that is scheduled for September 25 and 26 which would give a hint as to what policy measure the Central Bank of Nigeria (CBN) plans to sustain its intervention in the foreign exchange market to stabilise the exchange rate. The CBN has also indicated its desire to achieve single digit exchange rate expected to enhance the confidence of investors and attract more foreign exchange inflow and continue to support economic recovery that will lead to growth if supported by the right policy actions from the fiscal authorities.
The market started out with a little pullback in the morning, and turned green before midday before pulling back by the afternoon to consolidate the downtrend with the benchmark index taking back more than 97% of the losses. Nestle Nigeria and Guaranty Trust Bank appreciated in value after the index touched an intraday high of 34,883.22 and low of 34,734.24 points, just as the NSE Banking and NSE Insurance remained green, while others moved in the same direction as the Nigerian Stock Exchange (NSE) All Share Index (ASI).
Market sentiment is turning positive as buying pressure increased as revealed by the volume index of 0.70, with buying position of 76%, and 24% selling volume of the day’s transaction to sustain the down market.
Meanwhile, the composite NSEASI shed 26.25 basis points to close at 34,846.82 from the 34,873.07 points opening level which represented a 0.08% decline, just as market capitalisation for the day fell by N9.06bn to close at N12.01tr, from N12.02tr in the previous session, representing a 0.08% value loss to continue the bear transition.
Price depreciation in medium and high cap stocks amongst which are: NB, Total Nigeria, PZ Cussons, Flour Mills, Dangote Sugar, Seplat, Oando, 7-Up, Access Bank, UBA and Zenith Bank, which impacted negatively to reduce the All-Share Index’s year-to-date returns to 29.66%, just as market capitalisation year-to-date gains stood at N2.77tr, representing 29.91% above the year’s opening value.
Market breadth for the day remained negative as the number of decliners outnumbered advancers in the ratio of 24:14 on a low volume traded. It was however higher than the previous day’s level to continue the downtrend.
Market activities in terms of volume and value were up with 7.32% and 84.01% respectively to 174.66 million shares, as against the previous day’s 162.74 million units and N2.83 billion from the N1.54 billion recorded in the previous session.
Transactions in the shares of Guaranty Trust Bank, FCMB, FBNH, AXA Mansard and Zenith Bank topped the volume chart.
At the close of the day’s trading session, Linkage Assurance topped the advancers’ table with a 5.00% gain to close at N0.63 per share on market forces, followed by AXA Mansard with a 4.74% notch at N1.99 per share on Q3 earnings expectation.
On the flipside, FBNH lost 4.99% to close at N5.14 on profit taking, followed by Seven up Nigeria Bottling company plc, which shed 4.96% to close at N85.82 per unit on profit taking and market sentiment.
Technically, the market is still weak until a breakout of the downtrend line, expect the struggling indicators to recover and continue with high volatility as trading opens this morning, amidst profit taking and repositioning in hope for positive macro-economic indices. These will drive optimism in equity investments ahead of the MPC’s meeting outcome, Q3 earnings season and year-end.
We expect the Nigerian government to review its 2017 budget implementation strategy and put in place some fiscal measures that will help the monetary authorities sustain the ongoing economic recovery as shown by the positive but fragile GDP and further help to drive inflation numbers down faster than the August level to make growth and development a reality.
Investdata believes the time has come for the Federal Government to stop telling Nigerians and Foreign investors stories that seem different from reality on ground and work towards improving the living conditions of the Nigerian peoples. It is time to work the talk, and begin to stimulate the economy, despite the delay so far.
However, investors need not panic if they take position based on strong numbers and future prospects of any stock. One thing that is clear in the current market situation is that smart investors are using the ongoing correction to accumulate and enhance their positions in some stocks.
Again, we advise that investors allow numbers to guide their decisions while repositioning for the rest of the year’s 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.
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Tel: 08028164085, 08032055467