Investors Look To Thursday’s Session For Direction On NGSE Ahead Of Elections
Trading activities on the Nigerian Stock Exchange (NSE) at the midweek had a difficult and volatile session, halting the previous eight trading sessions of bull run on profit booking after the early hour rally failed on heightened political risk ahead of the all-defining Presidential and National Assembly elections of Saturday, February 16, 2019.
It is not known whether the continued political tension arising from the arrest warrant of the suspended Chief Justice of Nigeria (CJN), Justice Walter Onnoghen, issued by the Chairman of the Code of Conduct Tribunal (CCT) on Wednesday, despite the ruling of the Court of Appeal, as well as the lingering insecurity in the northeast has anything to do with the slide in the NSE’s All Share index, on a day the two leading candidates- incumbent President Muhammadu Buhari of the All Progressives Congress (APC) and Atiku Abubakar of the Peoples Democratic Party (APC) and former Vice President of the Country, signed a peace accord.
The changing dynamics in Nigeria’s political environment has already with the disregard and disrespect for the constitution have led to fear which triggered selloff as buying interest among investors slowed down.
Midweek’s decline was despite the seeming positive economic data released on Tuesday, showing that non-oil sector recovery boosted the nation’s GDP to 1.93% according to the 2018 report of the National Bureau of Statistics (NBS) (READ HERE). Also, the decline in NSEASI occurred on a day the NBS published the Capital Importation Report for 2018 Q4 and full year, showing that despite a decline in the final quarter, there was a growth for the year over the preceding one (READ MORE).
The NSE Index opened Wednesday’s trading on a gap up in the morning, but pulled back between mid-morning and midday before retracing up in the afternoon session on demand for industrial and consumer goods stocks, a situation that supported a rebound, resulting in a marginal loss for the day.
However, the NSEASI touched intraday highs of 32,635.13 basis points from a low of 32,267.37bps on profit taking in banking and insurance stocks to close the session at 32,413.92bps.
Market technicals at the midweek were weak, as volume traded was lower than previous session in the midst of a negative breadth and mixed sentiment as revealed by Investdata’s Daily Sentiment Report, showing a buying volume of 40% and selling position of 60%, while daily transaction volume index stood at 1.44.
The momentum behind the day’s market performance was up, despite the profit taking as shown by 74.07 point money flow index, from previous day’s 72.95bps, indicating that funds are leaving some stocks to enter others.
Index and Market Cap
The NSE’s benchmark All Share index at the end session shed 48.39bps, to close at 32,413.92 after opening at 32,462.31bps, representing a 0.15% decline, while market capitalization dropped N18bn to close at N12.09 trillion, from the opening value of N12.11 trillion. This represented a 0.15% value loss.
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Midweek downturn was driven by profit taking in Seplat, Guaranty Trust Bank, Zenith Bank, FBNH, UBA, Access Bank, Dangote Flour and Forte Oil, among others. This impacted negatively on Year-to-Date gain, reducing it to 3.13%, while market capitalization gain dropped slightly also to N367bn from the year’s opening level of N11.72tr, also representing a 3.13% growth.
Mixed Sectors Indices
The sectoral performances indexes were largely bearish, except for the NSE Industrial and Consumer goods sectors that closed higher as investor positioned in stocks like Dangote Cement, CCNN, and others. Market breadth remained positive with decliners outnumbering advancers in the ratio of 22:19.
Market activities were down in volume and value by 18.95% and 47.20% respectively to 479.3m shares worth N4.24bn, from previous day’s 580.41m units valued at N8.03bn. Transaction volume was largely driven by financial services and conglomerates stocks like: Diamond Bank, Zenith Bank, Guaranty Trust Bank, Transcorp and Access Bank.
Berger Paints and Unilever were the best performing stocks for the day, topping the advancers table with 10% each to close at N8.25 and N44.00 respectively on expectation of Q4 earnings reports and high dividend yield respectively. The flipside was led by C & I Leasing and Champion Breweries which shed 10% and 7.85% respectively to close at N7.33 and N1.61 each, on the back of profit taking and reconstruction .
Market Outlook
We expect this ongoing trend and volatility to persist, as investors and traders reposition for 2019 dividend declaration season and post-election rally which are expected to shape market performance in the interim. We advise cautious trading and investing while positioning in fundamentally sound equities. As early filers like United Capital, Africa Prudential, NB, Forte Oil and other are expected to hit the market with their numbers any moment from now.
Volatility will also continue as investors and fund managers reposition their portfolios, with eyes fixed on political space and ahead of January inflation data, which is another factor 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.
Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
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https://investdata.com.ng/2019/02/investors-look-to-thursdays-session-for-direction-on-ngse-ahead-of-elections/
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