Nigeria’s Equity Indicators Stay South, Amidst Weak Money Flow, Portfolio Rebalancing Ahead Full-Year Numbers

Market Update for January 23

Equity market on Tuesday recorded a very volatile movement to pullback in consolidation of the previous day’s correction on mixed sentiments and relatively high volume to kick off a wave 4 correction as profit taking persisted, especially in banking, Insurance and industrial goods stocks. In the process, the composite Nigerian Stock Exchange (NSE) All-Share index suffered a heavy downward pull during the trading session. A lot of the stocks in the financial and consumer goods sectors suffered huge losses due to the much envisaged profit takers activities. The day started out with a snap and a thrust to the downside in a morning session, when the index hit a low of 43,720.59 basis points, before reversing to touch high of 44,937.83 between the midday and afternoon, after which there was another pull back before the market closed the day lower at 44,389.85.

Market technicals for the day were mixed and weak, despite the fact that the index remained in the rising channel since it did not breakout the upper line of the channel with huge volume traded at that point. The two-day pullback due to profit booking has signaled a wave 4 correction as mentioned earlier, which may not last long, especially with the earnings reporting season around the corner. It must be noted that investor expectations of these numbers have been priced into stock prices on the exchange, especially judging from the Q3 financials. It is therefore earnings surprises from these companies, particularly those in the banking, industrial and consumer goods sectors that will trigger another uptrend, just as disappointments would likewise lead to further correction in the share prices of the affected stocks.

This is the reason investors should stay with fundamentally sound stocks that have good dividend history and had recorded earnings uptrend in 2017.
Meanwhile, Tuesday’s session closed with a buying pressure of 55% and selling position of 45%, while volume index recorded 0.92 of the day’s total transaction, reflecting mixed sentiments, just as institutional money flow index moved strongly towards the southward direction, a signal that funds are leaving the Nigerian market.

The All Share Index shed 522.68 points to close at 44,3,89.85 basis points after opening at 44,912.53, representing a decline of 1.16% on high traded volume which was however lower than the previous day’s levels. Similarly, market capitalisation for the day lost N187.25bn to close at N15.9tr, after opening at N16.09tr, also representing 1.16% depreciation in investors’ portfolios.

Tuesday’s losses by low, medium and high cap stocks, impacted negatively on the NSE’s Year-To-Date returns, reducing it to 16.07%, just as market capitalisation gain for the period dropped to N2.29tr, representing 16.85% YTD growth.
The NSE’s benchmark Index and all sectorial indices closed in red, except for the NSE Consumer Goods and NSE Oil/Gas indexes that managed to 0.70% and 0.10% green respectively, while the NSE AseM remained flat. Market breadth was negative as decliners outnumbered advancers in the ratio of 43:14 to continue the bearish transition.

Market activities in volume and value terms for the day were down by 83.37% and 51.82% respectively to 737.86m shares worth N7.67bn from previous day’s 4.44bn units valued at N15.93bn. Transaction volume for the day was significantly boosted by stocks in the financial services sector, as Skye Bank, FBNH, Wema Diamond Bank and Transcorp continued to witness heavy trading volume to top the activity chart as most traded. There was also a very heavy demand for shares of Oando Plc, following which it closed on strong bid of about 156m units, as investors continue to interpret the company’s statement on Monday that the technical suspension on its shares as directed by the Securities & Exchange Commission (SEC) could soon be lifted (READ STORY). The calculation is that the accord with one of the two shareholder-petitioners, Alhaji Dahiru Mangal, which was brokered by Emir Muhammadu Sanusi II of Kano, would lead to a rally in its share price once the suspension is lifted by the NSE.

Skye Bank and Caveton topped Tuesday’s advancers table, with 9.91% and 9.84% respectively to close at N1.55 and N2.68 each. Skye Bank’s price continues to be driven by market sentiments, rather than anything fundamental, given that it is yet to present its 2016 audited financials or even the quarterlies for 2017 for review to the market. Fidelity Bank and AG Leventis however suffered the biggest losses for the day, after shedding 9.91% and 9.09% to close at N3.57 and N0.60 respectively, purely on profit taking by the traders and investors.

TODAY OUTLOOK
We expect profit taking and volatility to continue, but there should be no panic for investors who have taken position in value stocks for the expected quarterly and full year score-cards underway. The energy behind money flow index as at yesterday was weak. Portfolio reshuffling on the on the strength of companies fundamentals and payout possibilities.
However, we would like to reiterate that investors should go for equities with intrinsic value, especially during this season that dividend payment is approaching.

We advise investors to allow numbers 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 08028164085.
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 includes 15 stocks picks for 2018 are available now to guide your positioning as trading for the year just started.
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.

UP Coming Seminar, Practical Conference on Technical Analysis for the Novices and Advance Traders. Understanding the momentum behind current equity movement and when to exit using SIMPLE Technical Indicators and Tools to avoid losing capital and profit. Registration is ongoing, Call or text yes to the phone numbers above.

Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467
http://investdata.com.ng/2018/01/nigerias-equity-indicators-stay-south-amidst-weak-money-flow-portfolio-rebalancing-ahead-full-year-numbers/