Political Tension: Profit Taking, Volatility, May Persist As Investors Reposition For Earnings

Market Update for January 29
Tuesday’s trading on the Nigerian Stock Exchange (NSE) was once again bearish as the composite All-Share index suffered huge loss extend two days of profit booking and selloff which has been blamed on the recent drama in the political environment. 

The occurrence has triggered domestic and international concerns ahead of the February 16 Presidential election, sending negative signals into an already struggling economy.

The session started out gapping down, and then continued downward, stair-stepping all day, forming bear flags and wedges. It pulled back to some of the deepest levels right into the close of the day after touching intraday low of 31,178.71 basis points from a high of 31,334.61bps which was lower than it opening on a high traded volume and amidst negative sentiments. It was one of the worse days in the past 14 trading sessions.

It is obvious that the panic button has been activated. Remember that in May 2018 when the crises started with ward congresses in many states, which worsened in July by massive defections across the political parties even before the campaigns kicked off later in the year. There was however relative calm ever since until the plot to, until last week’s eventual removal of the Chief Justice of Nigeria.

Market technicals for the day were negative with the higher volume traded than previous session’s in the midst of a negative breadth and sentiment for stocks as revealed by Investdata’s Daily Sentiment Report, showing sell position of 100% and 0% buy volume. Volume index for day’ was 0.92.

The momentum behind the day’s market performance was down to reflect profit taking as shown by 62.07bps money flow index, from previous day’s 64.05bps, an indication that funds are leaving some stocks and the market.

Index and Market Cap
At the close of the day’s trading, the NSEASI lost 165.53bps, closing at 31,178.71bps after opening at 31,344.24bps, representing 0.53% decline; while market capitalization dropped by N61.72bn, closing at N11.63tr from the opening value of N11.69tr, representing a 0.53% depreciation in value.

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The downturn resulted from selloff in Nigerian Breweries, Guaranty Trust Bank, Access Bank, Zenith Bank, Flourmills and Dangote Sugar, among others, pushing Year-to-Date loss to 0.80%, while the loss in market capitalization increased to N100.01bn, from the year’s opening level N11.72tr, representing a 0.89% decline.

Bearish Sectors Indices
The exchange yielded to profit taking reflected in all sectoral indices as they closed lower, while market breadth stayed negative with decliners outweighing advancers in the ratio of 30:14. Market activities were however up in volume and value by 61.44% and 3.80% as 359.51m shares worth N1.91bn, from previous day’s 222.69m units which hands for N1.84bn. Transaction was driven by financial services stocks like: Consolidated Hallmark Insurance, UBA, Sterling Bank and Diamond Bank.

Redstar Express and UACN Property were the best performing stocks for the day, gaining 10% and 9.55% respectively to close at N5.50 and N1.72 each on impressive Q3 numbers and market forces. The flipside was led by Neimeth Pharmaceuticals and Academy Press losing the maximum 10% each to close at N0.63and N0.45 respectively, on poor Q1 earnings report and market forces.

Market Outlook
The lingering profit taking and volatility, driven by political tension is expected to persist, as market players continue to reposition for 2019 dividend declaration season that will shape market performance after the elections. We advise cautious trading and investing why positioning in fundamentally sound equities.

Volatility will also persist as investors and fund managers reposition their portfolios, with eyes fixed on political space and ahead of full year company earnings position and post-election market dynamics. These are likely to drive prices north, or south, while determining market direction before or after the Presidential Election.

Investors should review their positions in line with their 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 low in the midst of mixed company numbers, weak economic and market fundamentals

RE:PORT HARCOURT 2019
We wish to appreciate all who made our Port Harcourt INVEST 2019 Summit a huge success. This has once again demonstrated that Nigerians are hungry for investment information and desire to change their financial position.

The difference between you and others who are not aware of what I am sharing with you is ACTION. Take action that will transform your life throughout 2019 and beyond by getting the just concluded and life transforming INVEST 2019 TRADERS & INVESTORS SUCCESS SUMMITHome study pack (USB) that you can play on your phone, Laptop and Television set.

The event, which held on Saturday, December 8, 2018, was yet another successful, insightful and educative outing that not only offered direction as to where investors should look for a profitable trade in 2019, insight into industries, sectors and companies to seek worthwhile returns.

What stocks should you buy? Grab the pack for the 10 Golden Stocks with possibility of offering in 2019 multiples of what broader stocks do, coming out of this market correction environment.

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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

https://investdata.com.ng/2019/01/political-tension-profit-taking-volatility-may-persist-as-investors-reposition-for-earnings/