PORTFOLIO REBALANCING TAKES CENTRE STAGE AS INVESTORS, TRADERS POSITION FOR YEAR-END

MARKET UPDATE FOR DECEMBER 19


Trading on the Nigerian Stock Exchange on Tuesday continued its downside trend on a strong selling pressure. It must be noted that the losing momentum in the index slowed down, even as profit booking persisted amidst the yuletide season, sustaining the volatility wave ahead of the year-end rally induced by portfolio managers and the 2018 earnings reporting season.
The session opened lower, before slipping in a three-wave decline to continue the correction by midday and then bounced in the afternoon to reduce the day’s loss. The benchmark index closed near the lows for the day at 37,783.73 from intraday high of 37,960.63, on a negative market breadth and huge volume traded which was driven principally by conglomerate- Transnational Corporation of Nigeria (Transcorp), with mixed sentiment of buying trades of 57%, while selling position of the stock was 43%.

The day’s market technicals was weak with negative breadth, volume declined marginally and index on the southward direction as selling pressure stood at 100% and volume index, 1.33 of the total day transaction.
Meanwhile, the NSE All-Share Index shed 174.20 basis points to close at 37,783.76 from the opening 37,957.91 points, representing a 0.46% decline. Similarly, market capitalisation was down by N61.97 to close at N13.45tr from an opening value of N13.51tr, representing 0.46% value depreciation in investors’ portfolios.

The sustained downturn resulted from value losses recorded by low, medium and high cap stocks like Nigerian Breweries, Dangote Cement, Zenith Bank, Flour Mills, Dangote Sugar, GTBank, UBN and ETI. This further impacted negatively on the NSE’s year-to-date return, reducing it to 40.59%, just as YTD growth in market capitalisation dropped to N4.2tr, representing a growth of 45.41% above the year’s opening value.
Market breadth for the day was negative as the number of decliners outnumbered advancers in the ratio of 26:15 on a huge traded volume that was lower than Monday’s level.

Activities in terms of volume and value were down by 13.32% and 99.58% respectively to 649.63m shares worth N5.43m from previous day’s 752.11m units, valued at N127.93bn. Transactions were driven by activities in Transcorp, FBNH, Zenith Bank, GTBank, and Thomas Wyatt topped the volume chart.
At the end of the day’s trading session, Livestock Feeds and Unilever topped the advancer’s log, gaining 4.88% and 4.45% respectively to close at N0.86 and N41.99 each on market forces. On the other hand, C & I Leasing and Dangote Sugar shed 5% and 4.99% to close at N1.33 and N20.57 respectively on profit taking and market forces.

TODAY’S OUTLOOK

Ahead of mid-week’s trading, expect volatility to continue as traders position in the mix of profit taking in expectation of yearend rally as fund manager balance trade and account for the year in order to target and earn their management fee. Add this to the declining interest rate in the money market which is likely to trigger circular flow of fund again into the equity market. The positive outlook for emerging markets in 2018 as a result of high commodity prices is a major attraction as currencies of these developing markets remain relatively stable.
All of these factors begin to make much more sense to investors when you add the undervalued nature of assets on these exchanges.
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 stock prices remain volatile amidst improving company, economic and market fundamentals.

It is time to combine fundamentals and technical tools to take decision by knowing the support and resistant level to reposition or exit any position. Market is in phases know the cycles in order to manage your trading and investing risk. For stocks that should be on your shopping list to buy in this seasonality changes as the year winds down, sign up to INVESTDATA BUY AND SELL signal setup by calling 08032055467.

Get your home study pack on INVEST 2018 Traders & Investors Summit and ride with the current recovery on Nigeria’s stock market and economy. By investing and trading knowledgeable. You can also still access stocks analysed in the home study pack of the INVEST 2018 traders & investors summit, which is out already.

Comprehensive training materials on stock Trading and Investing for Financial Independence series are Available, you can play and watch on your mobile phone, laptop, desktop and Tv. Kindly call or send yes to 08032055467, 08028164086 or 08111811223.

Ambrose Omordion
CRO|Investdata Consulting Ltd
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