Speculation May Shape Trading On NGSE, As Investors Await Fresh Economic Data

Market Update for November 19

Monday’s trading on the Nigerian Stock Exchange (NSE) closed higher, consolidating previous day’s positive sentiments as buying interest among market players continued to look up, despite the low traded volume, as portfolio rebalancing continues, amidst fresh position taking on the strength of low entry prices ahead of year-end rally.

The fact that the Nigerian market is resisting further decline at this point should send a signal to investors and traders that the current low valuation of stocks on the bourse will not last for too long any more, hence the need to take advantage of the positive market breadth.
Investors and traders are also on the look-out for the all-important October inflation reports and outcome of the year’s final Monetary Policy Committee meeting for the year, where members would most likely retain the monetary policy rate at 14%. This is also as the anticipated impact of the 2018 budget implementation and electioneering campaign spending are yet to reflect on economic activities which continues to look down.

The NSE’s benchmark index opened Monday on a downside movement in the morning, but retraced up by the mid-morning to afternoon on increasing demand for financial services and consumer goods sector stocks which had suffered huge losses before now. The index during the session touched an intraday high of 32,226.73 basis points, from a low of 32,026.17bps before closing the session at 32,222.24bps on a low volume and above the session’s opening level. It started a 5-wave advance that took the NSE from just over 32,058.58bps to just over 32,222.24bps, which is more than 160 points. Also, MACD on daily time frame showed bullish crossover of the signal line which supported continuation of trend.

Monday’s market technicals were positive but weak in the midst of low volume traded, positive market breadth and strong buying pressure as revealed by Investdata’s Daily Sentiment Report, which shows a buy volume of 98% and 2% sell position. The volume index for the day’s total transactions was 0.60, while energy behind the market’s performance was weak, going by the drop in Money flow index to 49.20bps, from previous day’s 51.69ps, indicating that funds are leaving some stocks and the market.

Index and Market Cap
The benchmark All Share index gained 163.96bps, at 32,222.24bps at the end of Monday’s trading, having opened at 32,058.58bps, representing 0.51% growth, just as market capitalization climbed by N59.86bn, at N11.76tr from an opening value of N11.73tr, representing a 0.51% value gain.

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The session’s upturn followed price appreciation in low, medium and high cap stocks like Guaranty Trust Bank, Zenith Bank, UACN Property, GSK, Flourmills, Oando, FBNH, Access Bank and Ucap. This impacted positively on Year-to-Date returns, which dropped to 15.74%, while market capitalization stood at N1.93tr from its opening level in January, representing 14.02% slip.

Mixed Sectors Indices
Sectorial performance was largely bullish, except for the NSE Industrial goods and Oil/Gas that closed lower. Market breadth was positive with advancers outnumbering decliners in the ratio of 27:5.
Market activities were down in volume and value by 9.84% and 35.52% respectively at 148.1m shares worth N1.8bn, from previous day’s 164.26m units valued at N2.79bn.

Transaction volume was boosted by financial services and Oil/Gas stocks like: Oando, Diamond Bank, UBA, Fidelity Bank and Guaranty Trust Bank.
GSK and UACN Property were the best performing stocks, leading the advancers’ table, after gaining 9.96% and 9.72% respectively to close at N13.25 and N1.58 each on market sentiments.
On the flip side, Mutual Benefits and Union Diagnostic lost 8% each to close at N0.23 and N0.23 respectively, on market trend.

Market Outlook
As we have earlier said, speculative activities will shape the performance of the market going forward given that there is no new incentive for the market so far, until there is a change in the narrative. Going by the timetable of the National Bureau of Statistics (NBS) released earlier in the year, the nation’s Q3 Gross Domestic Product (GDP) report is slated for release on Tuesday, November 27, same date as the Q3 capital importation report.

The ongoing volatility will persist as Q3 numbers assist investors and fund managers rebalance their portfolios, while watching the political space and ahead of the expected Q3 GDP and full year company earnings position. These are likely to drive prices north, or south, while determining market direction before or after Presidential Election.

Investors should review their positions in line with investment goals, strength of the 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 fundamental.

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