MARKET UPDATE FOR MARCH 6

NSE INDICATORS BLEED FURTHER, OBLIVIOUS OF FULL-YEAR SCORE-CARDS

At the end of trading on Monday, the Nigeria Stock Exchange (NSE) joined most equity markets around the world to close lower on the first trading day of the first full week in March, still very much unmindful ofthe impressive earnings so far emanating from the financial sector. 

During the session, Access Bank released its 2016 financial year report that beat estimate, but the market seemingly punished it, when its price suffered the deepest cut in recent times in daily trade. It followed the trend in the course of this earning season, amidst belief that except for a few,market response to results published has not been commensurate, amidst more caution trading. This as however offered investors opportunities to buy these stocks cheaper to meet their medium and long term investment goals, especially the dividend income investors. 

Reasons for this market behavior since the advent of the earnings season are not far fetch from those earlier adduced such as low confidence in the economy of which the market is subset; and illiquid in the system. It is generally known that the economic reforms policy of the Federal Government and its team has not ameliorated the living situations of Nigerians and the business environment as revealed by negative economic data emanating from the NBS for the past 22 months. Economic progress or success of a nation, state, corporation or business enterprise is measured by statistics and these numbers tells you whether you how well you are doing with your strategies, plans, policies and budgets. 

Political statements that ‘we are making progress,’oftentimes, amount to nothing if such ‘progress does not reflecting statistical data and more importantly- is visible in the economic well-being and life of the people. When there seems to be no progress, the need to revisit the plan becomes urgent, with corresponding strategies and policies to amend or change and ensure the desired result. Let the government have a rethink on some of it policies, the people drive this policies and the timing. 

Meanwhile, at the close of Monday’s trading session, the composite NSE All-Share Index shed 430.09points to close at 24,581.99 points, after opening at 25,012.08 points, representing a 1.72% decline on low volume. This indicates weak investor sentiments for the market and the high volatility which weaken optimism with strong selling pressure that pushed it southward.The buying volume of total transactions for the day was 2%, while selling position was 98% to reverse the previous day’s up market.  

In the same vein, market capitalisation for the day fell by N148.85billion to close lower at N8.51 trillion, from an opening value of N8.66 trillion, representing 1.72% loss in value, with the market having mixed sentiments in the earnings season. 

Value depreciation in the following stocks Guinness, Dangote Cement, Unilever, Access Bank, UACN, FBNH and Okomu Oil Palm, pushed the NSE All-Share index’s year-to-date negative position to 8.53%, just as that of the market capitalisation for the period adjusted to N739.57 billion, representing 8.11% loss over the same period.  

Market breadth was negative and weak as the number of decliners outpaced advancers in the ratio of 20:15 to short live the previous day bull market. 

The day’s transaction volume and value were down by 53.28% and 56.66% respectively to 128.16 million of shares from 274.17million in the previous day, while value dropped to N1.47billion against the previous valued at N3.40billion.  

Transactions in financial services stocks like Zenith Bank, UBA, Guaranty, Ucapand Transcorp dominated the activity chart as most traded equities by volume. 

The NSE All-Share index and all sectoral indices had mix performances to close the day’s transaction lower, except for NSE Banking, NSE Consumer Goods and NSE Oil/Gas that were higher.  

Nestle led the gainers table with 9.96%, to close at N691;while 7-Up led the losers table, shedding 9.47% to close at N86. Positive market response to Nestle Nigeria result has supported the price rally as the earnings report beat market estimate despite it was a decline position in terms of profit

DAILY TIME FRAME NSEASI 

The index on a daily time frame again broke its strong support and descending triangle to continue its downtrend on a low volume. Within the bearish channel as the market reversal at this point will be a function of market forces when trading activities begin on Tuesday.

The index has finally given up its breakdown of the 25,000 psychological lines, to deepen the oversold position. 

The current trending ability of the market on a daily time frame is strong, as ADX is above 20 at 27.90, MACD just cross it signal line to bearish and signaled sell, while RSI reading 29.04 as at the close trading on Monday.  

We advise you hold your position in value stocks that are likely to pay dividend and those whose directors have recommended dividend, but their prices are going down due to market sentiments. When factors that attracted you to stock is still intact just be patience.