NGSE: Investors React To March Full-Year Accounts, As Money Flow Index Weakens Further

Market Update for July 2, 2018

The nation’s equity market on Monday started off with a plunge at the opening as the new market structure of the Nigerian Stock Exchange kicked off, after the seeming end-of-month rally on Friday as highly capitalized stocks shed value to pull the market down.

Monday’s session also witnessed an outpouring of notification of closed period by companies, ahead of the release of their half year earnings reporting season which kicks off from next week, while those paying interim dividend, particularly banks announced plans to audit their numbers, before present same to the Central Bank of Nigeria (CBN), the industry’s primary regulators for approval. This, the board of the United Bank for Africa Plc warned, could last till on/before 29, 2018, when it hopes to make it available to the market.

NSE Index started the day with a little move to the downside, and further pulled back to break down the recent strong support level at 37,977.25 after touching low of 37,946.92 from intraday highs of 38,322.94 to continue the ongoing volatility on the exchange.

The sustained bearish trend despite various attempts at recovery resulted from smart money exiting positions due to the higher yields environment in developed market and economies, as well as the bearish economic outlook in the midst of rising crude oil price, politics, conflicts, insecurity and among others are threatening local and international investors’ confidence.

The commencement of a new market structure is expected to boost market making activities and enhance liquidity, ow that the pre-market trading window opens at 9.30am and prices can move by between 5% and 10% up or down during the during the timeframe. Despite the technicalities involved, it is a welcome development that will become clearer with time.

Market technicals for Monday were negative as traded volume was low in the midst of negative market breadth and sentiments, as revealed by Investdata’s Daily Sentiment Report showing a ‘sell’ pressure of 100% and ‘buy’ volume of 0% on a volume index of 0.72 of the day’s total transactions.

The energy behind the market’s performance were weak and low, as reflected on the money flow index at 22.26 points from the previous day’s 22.40 points, an indication that funds are still leaving the market. This also gives an insight to the level of expected impact of the corporate earnings on the market.

Index and Market Cap                                     

The Composite NSE All-Share index for the day shed 331.63bps, closing at 37,946.92bps, after opening at 38,278.55bps, representing a 0.87% decline on a low volume that was lower than the previous day’s. Similarly, market capitalisation dropped by N120.13bn to close N13.75tr from an opening value of N13.87tr, representing 0.87% value loss.

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The downturn recorded was attributed to losses suffered by medium and high cap stocks like Nigerian Breweries, Dangote Cement, Guaranty Trust Bank, Zenith Bank, FCMB, Fidelity Bank, Honeywell, Eterna, UBN and Forte Oil.  These impacted negatively on the NSE’s Year-to-Date return, pushing it further down to 0.77%, while market capitalisation gain for the period stood at N14.34bn a 1.17% rise above the year’s opening value, on the impact of new listings earlier in the year.

Bearish Sector Performance

Sectorial performance for the day was largely  bearish, except for the NSE Oil/Gas that  was marginally up  while the NSE Insurance, Industrial, Banking  and Consumer goods were down. Market breadth was negative as decliners outnumbered advancers in the ratio of 21:16 to reverse Friday up market.

Market activities were down in volume and value by 45.41% and 68.02% respectively to 256.23m shares worth N1.86bn from the previous day’s 468.6m units valued at N5.82bn. The day’s volume was boosted by trading in financial services and service providing stocks like  Sterling Bank,  FBNH, Wema Bank, UBA  and Mcnichols  that witnessed increased trading to top the activity chart.

Aiico  and C & I Leasing  were the best performing stocks for the day, that topped the advancers’ table, with 9.84% and 9.66% respectively to close at N0.67 and N2.27 each, due to market sentiments and forces

On the flip side, Forte Oil and Honeywell Flour were the worst performing, losing 9.74% and 9,61% each to close at N29.65 and N207 on market forces and poor dividend payout. This was especially true in the case of Honeywell, as investors react to its less-than-expected full-year ended March 31, 2018 account (READ).

Market Outlook

We expect a mixed performance as volatility continue ahead of Q2 earnings season since equities remain undervalued with higher yields. Investors should review their position in line with their investment goals and take action as events as it 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 less earnings are released ahead of march full year earnings release and 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.

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Sub Topics

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Kindly call or send yes to 08032055467, 08028164086 or 08111811223.

Ambrose Omordion

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https://investdata.com.ng/2018/07/ngse-investors-react-march-full-year-accounts-money-flow-index-weakens/