NGSE Index Ignores Robust Earnings, Trends Lower, Breaks Down Support Lines




Market Update for July 17, 2018

Nigeria’s Equity market traded yet another low on Tuesday to breakdown its strong support and psychological line as revealed by numbers at the end of the day’s trading session. This important technical break down in the midst of earnings season calls for serious caution at a time other investment windows like commodities and currency, especially gold, oil and cryptocurrency, are trending down in the international market.
All the drama in the media about the rising rate of insecurity in Nigeria, as well as the unassuaged fears in the political environment over the 2019 elections. This has not been helped by the slowdown in the nation’s economic recovery as revealed by the Q1 GDP slowdown at 1.95% that was lower that Q4 2017. It was however an improvement when compared to negative GDP of 0.91% recorded in Q1 2017, even as the Q2 GDP and June inflation data are being anxiously awaited. The National Bureau of Statistics (NBS) will publish the June inflation data on Monday, July 23, same day as the meeting of the Central Bank of Nigeria’s Monetary Policy Committee (MPC) opens, which again stresses the importance of this reports in committee’s decisions.
Not in any way amusing, is the Purchasing Managers’ Index (PMI) reports over the past four months, which indicates that there has been a consistent slowdown in real sector activities, triggering concerns among investors over the dwindling confidence level in the market and the economy at large.
Meanwhile, the NSE index had little gap down when trading opened in the morning, but spiked lower at the midday and afternoon to breakdown the 37,000 basis points key support level, reaching intraday lows of 36,949.30bps from the day highs of 37,281.34bps. Within the last few trading minutes of the session, the NSEASI tried to consolidate, though unsuccessfully, retracing slightly up at 36,963.75bps.
Technicals for Tuesday session was negative with low traded volume in the midst of negative market breadth and sentiments, as revealed by Investdata’s Daily Sentiment Report, showing a ‘sell’ pressure of 96%, while ‘buy’ position for the day was 4%. Volume index was 0.63 of the day’s total transactions.
Energy behind the day’s market performance was weak also, as reflected in the money flow index at 33.34points, down from the previous day’s 31.97 points, an indication that liquidity in the market remains weak, despite the inflow of funds as at close of trading. The index at the close of trading hit its six-month lower lows, due to the exit of hot money and political uncertainties around 2019 general election.

Index and Market Cap
The benchmark index at the end of the trading session shed 303.16bps, at 36,963.70bps, after opening at 37,266.86bps, representing a 0.81% decline, just as market capitalization, lost N109.82bn, closing at N13.45tr, from an opening value of N13.49tr, also representing 0.81% value loss to deepen negative position of investors.
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The downturn recorded was impact of losses suffered by medium and high cap stocks like Nigerian Breweries, Guaranty Trust Bank Zenith Bank, Lafarge Africa, UBA, FBN Holdings, ETI, Access Bank, PZ, Oando, Julius Berger and Dangote Flour. These impacted negatively on the NSE’s Year-to-Date return now at a negative 3.35%, just as market capitalization, within the period lost N219.35bn, same as 1.61% below the year’s opening value.

Bearish Sector Performance
Sectorial performance indices were largely bearish except for the NSE Insurance that closed in green at 0.15% due to value gain by Mutual Benefits and Continental Reinsurance. Market breadth was negative as decliners outweighed advancers in the ratio of 33:14, to continue the bearish run.
Market activities were mixed with volume down by 32.84% at 203.8m shares, from previous day’s 303.48m units, while value climbed by 17.09% to N2.39bn from Monday’s N2.04bn.
The day’s volume was boosted by trading in financial services and conglomerates stocks like Transcorp, Access Bank, Zenith Bank, Sovereign Trust Insurance and Custodian Investment Plc that witnessed increased trading to top the activity chart. Sovereign Trust Insurance and Wema Bank were the best performing stocks, topping the advancers’ table after chalking 8.0% and 7.94% respectively to close at N0.27 and N0.68 each, due to low price attraction and the bank’s impressive half-year financials.
On the flip side, Julius Berger and Capital Oil were the worst performing, losing 10% each to close at N24.30 and N0.27 on market forces.

Market Outlook
Reversal is imminent if more positive Q2 earnings reports hit the market today, considering undervalued state of equities and high yields. Investors should review their position in line with their investment goals and act as events unfolds in the global and domestic environment.
However, we would like to reiterate our advice that investors should go for equities with intrinsic value, especially during this season were Q2 interim dividend payment are expected in the market arena very soon.
We advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst improving company, economic and market fundamentals.

Investdata Stock Market Training Workshop

Date: Saturday, July 28, 2018, Venue Ostra Hall & Hotel Alausa Ikeja Opposite NNPC Gas Plant

Theme: Comprehensive Stock Trading & Investing Toolkit for Rest of 2018

Sub Topics
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2018H2 Trading Checklist: How to Find Winning Stocks in Nigeria’s Volatile Equity Market
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Kindly call or send yes to 08032055467, 08028164086 or 08111811223.

Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
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Tel: 08028164085, 08032055467
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