Market Update for the week ended March 1 and Outlook for March 4-8
Equities on the Nigerian Stock Exchange (NSE) experienced a rebound Friday, after three consecutive sessions of losses that followed a two-day gain with the week closing lower on negative sentiments and high traded volume to kick start the month of March. This resulted from bargain hunters taking advantage of the pullback to position in dividend paying stocks that had released their 2018 full year earnings reports and those yet to publish theirs but with robust Q3 Earnings Per Share (EPS) capable of supporting enhanced payout.
The extended negative outing for the period was attributed to the outcome of the highly contested February 23, 2019 Presidential election of which the Independent National Electoral Commission (INEC) declared incumbent President Muhammadu Buhari of the All Progressives Congress (APC) winner. This announcement triggered smart money sell down in a flight for safety offered by the fixed income side of the financial market to hedge against risk, despite the impressive corporate earnings and high dividend yield from numbers so far published.
Looking at the current market situation critically using key fundamental drivers, stocks prices have become arguably cheaper, compared to their low intrinsic values, a situation that should attract funds. This is especially as emerging markets gradually prepare to breakout their downtrend lines on renewed optimism, despite the seeming weak economic fundamentals in the midst of an ongoing earnings season, low investor confidence and outflow of funds into other investment windows, factors capable of keeping the market in this oscillatory mood.
Meanwhile, the bear transition continued in the period under review despite the mixed performance due to market reactions to the recent Presidential polls, with the benchmark NSE All-Share index opening for the week on a positive note, gaining 0.57% on a low traded volume. The index however turned red on Tuesday, when it lost 0.69% as smart money booked profit, a situation that worsened at the midweek session with a 0.71% loss on high volume. The market switched to panic mode on Thursday, leading to 1.63% loss, before the Friday rebound that reduced the week’s total loss to 2.12% on a high traded volume, compared to the previous 0.61% slide.
During the period, kobo stocks dominated the advancers table as blue-chip equities suffered from the impact of selloffs, cautious trading and flight for safety in the fixed income side, at a time when all eyes are on the expected economic policy and reforms by the government. Energy behind the week’s performance was slightly down during the period under review, as reflected in the money flow index of 45.34 basis points, compared to 46.33bps in previous week, an indication of cautious trading in the midst of funds outflow to other investment window.

Equity Indicators Last Week
The benchmark NSEASI in the period under review suffered huge losses on massive selloffs, shedding 688.28 basis points to close at 31,827.24bps after opening at 32,515.52bps, touching intraweek highs of 32,745.92bps from a low of 31,708.89bps. This was due to profit taking and selloffs in the midst of ongoing earnings’ reporting season and high selling pressure as revealed by Investdata’s weekly sentiment report showing 89% sell volume and 11% buy position, on a transaction volume index of 1.30 points.
In the same vain, market capitalization was down by N256.67bn to close at N11.87tr, from an opening value of N12.13tr, representing 2.12% depreciation in value, which impacted negatively on the NSEASI’s year-to-date increasing it to 1.26%.

NSEASI Weekly Time Frame
The composite NSEASI pulled back on investors’ concerns about the presidential election outcome to confirm decline as earlier signaled by the multiple tops chart pattern which coincided with negative sentiments that follow the outcome of the poll, dragging the index down on a high traded volume. A pullback within the rectangle signals a weakness, which may not last as trading entered the peak month of earnings season to support market rebound, especially if the governorship and state house of assembly elections also end peacefully. The chart above also shows that the market had suffered setback and mixed performance due to lack of interest and policies needed to help the capital market play a better role in the nation’s economic growth and development.
On a weekly time frame MACD has crossed the signal line and is still bullish, with the NSE index still above its 20-Day Moving Average.

Mixed Sectors Indices
The sectoral performance indexes for the week were largely bearish, except for the NSE Insurance and Industrial Goods that closed higher, even as the banking index suffered the biggest loss of 5.9%, owing to selloffs in major banking stocks. On the other hand, there was buying interest in insurance stocks like AXA Mansard and NEM Insurance, among others; while appreciation in Dangote Cement helped the sectoral index close up during the period.
Market breadth for the week was negative, with decliners ’outnumbering advancers in the ratio of 31:29 to continue previous week’s down market.
Market activities were up in volume and value by 16.24% and 11.13% respectively at 1.75bn shares worth N19.56bn, up from previous week’s 1.48bn units valued at N17.56bn.
Cornerstone Insurance and Livestock Feeds were the best performing stocks for the week, topping the advancers’ table with 19.17% and 15.52% gains respectively to close at N0.25 and N0.67 per share on market forces. On the other hand, Transnational Corporation of Nigeria (Transcorp) and NPF Microfinance lost 14.48% and 12.14% respectively, closing at N1.24 and N1.44 on its three kobo price adjustment for dividend declared by the directors as well as profit taking.

Market Outlook
With concerns over the elections and relative peace returning across the country, we expect market players to reposition their portfolios to drive the mixed performance in the new week. We also expect the general market sentiment to look up in the face of ongoing earnings reporting season, vis-à-vis market fundamentals.
Profit taking and volatility from early rally witnessed in the previous week driven by traders and investors who are repositioning ahead of dividend declaration by major listed companies.
The ongoing volatility will persist 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.

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Ambrose Omordion
CRO|Investdata Consulting Ltd
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