Market Update for September 20, 2018
Trading on the Nigerian Stock Exchange (NSE) was very strong as the benchmark All-Share index closed positive, reversing Wednesday’s down market on improved demand for blue chip stocks ahead of next week meeting of the Monetary Policy Committee (MPC) meeting.
The day started with a slight gap down with the index working its way slightly higher by midday and consolidating in the afternoon. Within the period, market technicals improved, touching intraday high of 32,480.89 basis points from a low of 32,330.18bps on a high volume to finish the day at 32,480.89bpbs.
The market further resisted decline on Thursday, which made MACD convergence to support short term rally in this downturn. The performance gap between the composite NSE index, technical indicators shortened to signal an imminent rebound, all things being equal, and outcome of next week’s MPC meeting being favorable to the market and economy.
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Thursday’s market technicals were positive, with high buying pressure on relatively high volume and positive market breadth as revealed by Investdata’s Daily Sentiment Report, showing a ‘buy’ position of 100% and ‘sell’ volume at 0%. Volume index was 1.01 of the day’s total transactions.
Momentum behind the day’s market performance was strengthened, despite the prevailing low liquidity. This was shown in the money flow index at 43.21bps, up sharply from previous day’s 32.83bps, indicating that funds are entering some stocks. This is exactly true of fundamentally sound stocks that had suffered losses before now..
Index and Market Cap
The benchmark index on Thursday gained 105.77bps, closing at 32,480.89bps, after opening at 32,327.59bps, representing a 0.33% growth. Market capitalisation was up by N38.61bn to close at N11.86tr from N11.82tr, representing a 0.33% value gain.
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Thursda’s upturn was impacted by value gain recorded in medium and high cap stocks, like: Lafarge Africa, UBA, Flourmills, Guinness, UACN and Dangote Sugar, among others. This impacted positively on the NSE’s Year-to-Date return, reducing the loss to 15.07%, while market capitalization for same period dropped to N1.75tr, or 12.87% from the year’s opening value.
Mixed Sectoral Performance
The sectors indexes were largely bullish for the day except for the NSE Insurance and Oil/Gas that closed red. The slide in the insurance index may not be out of place, given the uncertainties arising from the jostle by operators for funds that would enable them meet the new three-tiered minimum capital prescribed by the industry’s primary regulator- the National Insurance Commission (NAICOM).
Market breadth remain positive, with advancers outnumbering the decliners in the ratio of 25:15, even as transaction volume and value rose 32.18% and 58.32% respectively, to 225.93m shares worth N2.34m, from previous day’s 190.35m units valued at N1.77bn. This was largely driven by financial services and industrial stocks like: NEM, First Aluminum, Zenith Bank, Access Bank and FBNH.
Lafarge Africa and First Aluminum were the best performing stocks, topping the advancers’ table after chalking 9.90% and 9.7% respectively to close at N22.75 and N0.34 each respectively, purely on their low-price sentiment. On the flip side, Prestige Assurance and Unity Bank were the worst performing, shedding 9.7% and 9.3% of their opening value respectively to close at N0.56 and N0.88 on market forces.
Market Outlook
We expect the market to slow down, this being the last trading day of the week and, ahead of the MPC meeting slated for Monday and Tuesday next week. This will likely be followed by another round of positioning for the quarter-end rally that will usher in the Q3 earning season in October. We are in a season rising oil, expected new policy statement and reform that would stimulate the economy again.
The ongoing volatility is likely to persist as bargain hunters take advantage of the low-price regime, in the midst of continued selloffs and political risk, especially as shadow elections by political parties kick off any moment from now.
Already, investors are looking forward to Q3 earnings reports so as to rebalance their portfolios and watch the political space.
Meanwhile, analysing the actual numbers released has given basic insights into company earnings that are likely to drive prices and determine market valuation.
Investors should review their positions in line with investment goals, vis-Ã -vis strength of company numbers and act as events unfold in the global and domestic environment.
However, we would like to reiterate our advice that investors should go for equities with intrinsic value.
We advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst mixed company, economic and market fundamentals.
Attention
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Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
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Tel: 08028164085, 08032055467
https://investdata.com.ng/2018/09/indicators-slowdown-as-investors-gamble-on-options-ahead-mpc-meeting/#more
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