Expect Volatility, As Investors Take Profit, Watch Nigeria’s Political Space, Eye Earnings Season

Market Update for February 5

Nigeria’s stock market on Tuesday had a very interesting session, but closed positive, sustaining volatility for the third consecutive day of bull-run in the midst of weak quarterly earnings reports that were released recently to the market and ahead of 2018 full year earnings season. Investors are also keenly watching for the outcome of Nigeria’s Presidential election holding on Saturday, February 16, with mixed feelings, especially as the economy has suffered setback and performed below expectation, judging by recent official data.

On Tuesday also, the African Development Bank (AfDB) published the continent’s economic outlook, projecting that while Africa would grow 4% this year, Nigeria’s economy could come at 2.3% (READ MORE), even as the National Bureau of Statistics (NBS) is scheduled to publish the nation’s GDP data for 2018Q4 on Tuesday, February 12, 2019.

Trading on the NSE started out for the day on the downside and lasted till early afternoon on a 3-wave corrective pullback, but rallied back and tested the intraday highs of 30,773.57 basis points, from its lows of 30,521.42bps on the back of strong buying interests in blue chip stocks. The session subsequently closed higher at 30,773.67bps, meaning that the market in the past six weeks have recorded a mixed performance after the seeming high of December driven by Santa Claus and year-end rally.

Tuesday’s market technicals were positive, as volume traded was higher than previous session’s in the midst of a positive breadth and strong demand for stocks as revealed by Investdata’s Daily Sentiment Report, showing buy volume of 100%. Volume index for the day was 0.55
Energy behind the day’s market performance was however slightly down, despite the up market as shown by the 53.92bps money flow index, from previous day’s 55.08bps, an indication that funds left some stocks and entered some others.

Index and Market Cap
The benchmark NSE All-Share index for the session closed marginally high, gaining 28.52bps to close at 30,773.52bps having opened at 30,745.05bps, representing 0.09% rise; while market capitalization was up by N10.96bn at N11.48tr from the opening value of N11.46tr. This represented a 0.10% appreciation in value due to the listing of additional 1.13bn shares in favour of Consolidated Hallmark Insurance.

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Tuesday’s upturn was boosted by price appreciation in medium and high cap stocks like Nigerian Breweries, Guaranty Trust Bank, Access Bank, Oando, Wema Bank, United Capital, Stanbic IBTC and FBNH, among others. This impacted positively on Year-to-Date loss, reducing it to 2.09%, while the loss in market capitalization dropped to N215.56bn, from the year’s opening level of N11.72tr, representing a 2.08% decline.

Mixed Sectors Indices
The sectoral indices performance was largely bullish, except for the NSE Consumer goods that closed lower, while market breadth was positive with advancers outnumbering decliners in the ratio of 21:17.
Market activities were equally up in volume and value by 3.62% and 181.28%, as 190.32m shares worth N2.93bn, from previous day’s 183.67m units valued at N1.04bn. Transaction volume was driven by financial services and conglomerates stocks like: GTBnak, Zenith Bank, Fidelity Bank, FBNH and Transcorp.

Beta Glass and ABC Transport were the best performing stocks for the day, gaining 10% and 8.335 respectively to close at N66.00 and N0.39 respectively on market forces, The flipside was led by AG Leventis and Nahco, as they shed 6.90% and 3.77% respectively to close at N0.27 and N3.32 each, on the back of market forces and profit taking.

Market Outlook
We expect volatility and profit booking to continue, considering the hummer pattern of candlestick formation at the end of today trading, as elections dates draw closer heating up the political environment, a situation that continues to weigh down the bourse as investors and traders reposition for 2019 dividend declaration season that will shape market performance after the elections. We advise cautious trading and investing while 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.

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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/2019/02/expect-volatility-as-investors-take-profit-watch-nigerias-political-space-eye-earnings-season/