Market Update for April 9
Trading on the Nigerian Stock Exchange (NSE) closed with the benchmark All-Share index closing marginally down, compared to the huge losses of previous sessions. Tuesday’s oversold region is a sign that the market is resisting further decline and expecting positive information, from the government in terms of policy direction to trigger the expected reversal that is becoming long overdue after the uncertainty that pervaded the months ahead of the Presidential election.
Investdata is daily bombarded by anxious investors through phone calls, emails and text messages, among other, with questions such as whether stock prices will decline further. Our answer has remained ‘NO.’ But then, there is a 50/50 chance that the market is already at its oversold region presently and is just expecting a trigger to jumpstart the recovery. At the risk of repeating our position, Investdata analysts maintain that the market and many of the stocks are grossly undervalued at this point.
The primary challenges at the moment include the low confidence level, illiquidity and a failure on the part of government to provide the much needed direction. The last issue can be overcome very quickly by the government doing the needful by engaging the right people in the new cabinet, as well as economic managers that understand the importance of balancing fiscal and monetary policy to drive economic development and growth. The government also cannot continue to ignore the need to ensure the proper working and good corporate governance in an important and strategic organization like the Securities & Exchange Commission (SEC). It is painful that not only did the Muhammadu Buhari administration dissolve the new board inaugurated at the time by his successor- Goodluck Jonathan, for four years, he has not reconstituted the board in all of four years, following which the organization has been run as a department in the Ministry of Finance. Worse still, all by one member of the management team today is in acting capacity and yet, the government is quick to appoint boards for the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC). It then shows the scant importance attached to the Nigerian capital market by this administration, no wonder its treatment with such disdain.
NSE Daily Time Frame at OVERSOLD region of 21.69point
A key piece in the continuation of the global economic recovery will be a weaker dollar. It will drive a more balanced U.S. and global economy, and it will reflect strength in emerging markets (i.e. capital flows toemerging markets). The higher U.S. rates have meant a stronger dollar. With global central banks moving in opposite directions in recent years, capital has flowed to the United States. But the emerging markets have suffered under this situation, with money flowing out from emerging market economies and in the process weakening them, their currencies and leading to growth in their foreign currency denominated debts.
Also, the oscillation in oil price between $60 and $70 is good for Nigeria, if only our economic policy will empower private sector and government reduces the rate of borrowing to allow funds flow in the system.
The NSE index opened the trading on the downside in the morning and remained down nearly all day, touching intraday low of 28,989.48 basis points from a high of 29,160.11bps, before retracing up marginally in the afternoon. This reduced losing momentum and finished the day at 29,149bps on a low traded volume.
Market technicals for the day were negative but mixed, as volume traded was lower than previous day’s in the midst of negative breadth and strong buying pressure as revealed by Investdata daily sentiment report, showing a buy volume of 94% and 6% sell position of the total daily transaction volume index of 0.95.
The forces behind the day’s market performance was very weak, as shown by Money Flow Index at 12.01 points, from previous day’s 12.32bps, indicating low liquidity and lack of funds are causing low demand for stocks.
Index and Market Cap
The benchmark NSEASI for the session was down slightly by 12.78bps to close at 29,149.46bps, after opening at 29,162.24bps, representing a 0.04% decline, while market capitalization lost N4.8tr to N10.95tr, from its opening value of N10.95tr, and representing 0.04% value loss.
Attention: Join Investdata buy and sell signal setup to get all our in-depths analysis on the picture and to get access to our carefully created watch list of stocks. To become a member, send ‘YES’ or ‘STOCKS’ to the phone numbers below. The number of stocks on our watchlist has increased due to the prolonged market correction. Take advantage of this service to buy right and sell right during this Q1 earnings season and beyond.
Downturn for the day resulted from selloffs in: Dangote Cement, Zenith Bank, FBNH Holding, Dangote Sugar, FCMB, Transcorp and Consolidated Hallmark Insurance that slightly impacted the Year-to-Date loss which extended to 7.26%. Market capitalization drop increased to N771.98bn, or 6.59%, from the year’s opening level of N11.72tr.
Bearish Sectoral Indices
All the sectoral performance indexes were in red, with NSE Insurance leading the negative with 1.78% as players took profit in CHI Plc, NEM and Niger Insurance. Followed by others sectors. Market breadth stayed negative despite the seeming drop in selloffs as decliners outnumbered advancers in the ratio of 15:12.
Market activities in volume and value were down by 17.95% and 41.85% respectively, to 374.03m shares worth N3.06bn from previous day’s 455.88m units valued at N5.26bn, which was driven by financial services and ICT stocks like: Sterling Bank, Chams, FBNH, UBA and Guaranty Trust Bank.
Guaranty Trust Bank and Chams were the best performing stocks for the day, with gains of 7.77% and 7.69% respectively, closing at N34.00and N0.28 per share on the strength of positive market sentiment and three kobo dividend. On the other hand, NEM Insurance and Ecobank Transnational Incorporated lost 9.87% and 6.67% respectively, closing at N2.10 and N10.50 each, on profit taking and general market direction.
We expect a positive outing as traders speculate ahead of Q1 numbers and inflation data for March, which will give direction into how this year could turn out after seeing the weak 2018 financials.
Investors look to government’s policy direction as the market faces low liquidity problems in the ongoing earnings reporting season, vis-à-vis market and economic fundamentals.
Given the drop in the prices of major blue chips in recent times, creating entry opportunities, we expect speculative trading to shape the market direction going forward.
The volatility witnessed last week, was driven by traders and investors repositioning ahead of dividend declaration by major listed companies.
The ongoing volatility will continued as investors and fund managers rebalance their portfolios, with eyes fixed on political space and ongoing full year company earnings position and post-election market dynamics. Investors should review their positions in line with their 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 low in the midst of mixed company numbers, weak economic and market fundamentals.
Meanwhile, we greatly appreciate participants in the Abuja Invest 2019 Post-Election Bulls & Bears held on Saturday, March 23.
The investment education train moves to Port Harcourt, Rivers State, with Chart Summit 2019!
Attend the Practical Conference on Technical Analysis Application on stock market for novices and Advance Traders, where we would take participants through:
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The workshop is scheduled as follows:
DATE: April 13. 2019
TIME: 10am – 4.00pm
VENUE:Emerald Hotel, 193, Aba Road Rumuola, Port Harcourt, Rivers State.
This Summit is designed specifically for those who:
• Jump off profit position out of fear
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This practical workshop is for novice traders, investors, professionals and fund managers who want to overcome fear and improve their trading performance. The workshop is basically on practical charting on evidence-based techniques that is working in today market, just as the power of focused trading and investing strategiesto help participants build mental skills and turn fear into profits, besides protecting capital.
Registration is ongoing
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CRO|Investdata Consulting Ltd
Tel: 08028164085, 08032055467