Market Update for September 11
Trading activities on the Nigerian Stock Exchange (NSE) at the midweek remained volatile and mixed with the key performance indicators turning green and reversing previous day’s loss while halting five-straight sessions of decline on buying interests in medium and high cap stocks that had suffered losses in recent time.
It is obvious that budgets of any kind are estimates, for financing plans. However, the implementation style makes all of the difference, especially in the case of Nigeria, because budget performance in the country between 2015 and 2018 has been anything but optimal. This has expectedly impacted the life of Nigerians and the economy at large, despite the huge amount appropriated during this period.
The current state of the economy does not require a conservative budget. We believe that Nigeria, at this time, needs an expansionary projection to stimulate economic activities capable of having multiplier effects on the national income, given the effects in increased productivity and consumption that will subsequently oil the macro-economy for good.
A review of the assumptions in the proposed 2020 budget size, shows that it is 2.78% lower than the total estimated expenditure of N10.07trn in the 2019 budget, which is a source of concern for many investors and businessmen (READ MORE).
Also, the outcome of the presidential election tribunal will gradually reduce risks associated with the nation’s sovereignty since the light is becoming clearer as to where the pendulum will swing. We note that Alhaji Atiku Abubakar, Presidential candidate of the main opposition Peoples Democratic Party (PDP), has announced plans to go on appeal before the Supreme Court.
This suggests that early positioning ahead of the Q3 earnings season and the impact of government activities in their 100 days in office any moment in Q1 2020.
The market again resisted a further breakdown of a major support level at the end of Wednesday trading session due bargain hunting on stocks like Seplat, Nestle, Zenith Bank, Guaranty Trust Bank and investors buying into UBA and Access Bank for their interim dividend.
Meanwhile, midweek’s trading opened on the upside slightly and was up till mid-morning before oscillating between the midday and afternoon, touching intraday high of 27, 157.66 basis points, from a low of 27,009.52bps. It then finally pulled back marginally within the last minutes of trading, closing the day higher at 27,153.53bps on positive sentiments.
Market technicals for the session were positive and mixed, as volume traded was lower than previous day’s, amidst a positive market breadth and high buying pressure , as revealed by Investdata’s Daily Sentiment Report, showing ‘buy’ volume of 97%, while ‘sell’ position stood at 3% on total daily transaction volume index of 0.96.
The impetus behind the day’s performance was weak, as Money Flow Index dropped to 26.39 points, from the previous session’s 27.94bps, this indicated that funds exited some stocks and the market, despite the buying interest in high cap stocks. The current stock prices and the earnings powers of companies as revealed by their half-year Price/Earnings ratios and the general market show that there are high upside potentials if the economy improves. As market PE ratio stands at 6.96x.

Index and Market Cap
The benchmark index at the end of Wednesday trading gained 105.95bps to closing at 27,153.53bps after opening at 27,047.58bps, representing a 0.39% up, just as market capitalization rise by N51.54bn to close at N13.21tr, from an opening value of N13.16tr which also represented 0.39% value gain.
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The upturn for the day was due to position taking in medium and high cap stocks. The impacted positively on the NSE’s Year-to-Date loss, dropping to 13.61%, even as YTD market capitalization gain dropped to N1.34tr or 12.47%, from the year’s opening level of N11.72tr.

Bullish Sector Indices
The sectoral performance indexes were largely bullish, except for the NSE Insurance index that closed lower by 1.26%, while the Oil/Gas index led the advancers, after gaining 2.82%, followed by consumer goods index which was up by 1.6%; ahead of the 0.35% and 0.16% increase respectively by banking and industrial goods.
Market breadth was positive as advancers outnumbered decliners in the ratio of 19:13; while market activity in volume and value fell by 41.93% and 70.18%, respectively at 211.52m shares worth N1.45bn, from the previous day’s 364.29m units valued at N4.86bn. This volume was driven by heavy trades in stocks like Access Bank, Zenith Bank, Seplat, Nestle and Guaranty Trust Bank.
May & Baker and Union Diagnostics were the best-performing stocks, topping the gainers’ chart with 10% and 8.70% respectively to close at N2.09 and N0.25 per share on low price attraction and market forces. On the flip side, UACN and Flour Mills lost 2.07% and 1.80% respectively, closing at N6.05 and N13.34 on profit-taking and market forces.

Market Outlook
We expect the trend to slow down as bargain hunters take advantage of low valuation to trigger buying interest but any breakdown of this recent support level of 26,952.86 points will cause another panic but discerning investors should catch on it to average down because once there is direction through economic policies things will start change gradually as equity prices are underpriced, while investors watch these Sectors that have become defensive recently insurance, banking, industrial goods, services, and oil/gas ran true to bullish action in no distance time.

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Ambrose Omordion
CRO|Investdata Consulting Ltd
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