NGSE Indicators Behave To Type, As Emerging Vote Count Favour Ruling APC

Market Update for February 25

Monday’s trading on the Nigerian Stock Exchange (NSE) was very volatile, but closed positive to start the week, thereby wiping away two previous days of losses, and in the process defying the tension of last Saturday’s rescheduled Presidential and National Assembly elections’ outcome as collation of results continued by the Independent National Electoral Commission (INEC) continued.

In the history of Nigeria democracy and stock market performance, market reaction to incumbent re-elected had been marginal rally but in 1999 and 2015 when the military handover power civilian government and incumbent president were defeated, market recorded unprecedented rally due to high expectation of transforming economic policies and reforms knowing that every investment is against expectation. In case Progressives Congress (APC) emerges winner, as results announced so far are pointing to, market may not react much to it but will be supported by the ongoing earnings reporting season.

The sharp sell-off in 2018 was extended to early 2019 resulting a V shape market reversal by mid-January, followed by the February 2019 vertical rally in an election season. This shows that smart money investors are already participating in the market despite the seeming low traded volume, especially as money flow index continue to looking up. Also, knowing that the earnings season has kicked off with early fliers hitting the market, especially as payout has been impressive, relative to their market value.

The NSE Index opened trading on the upside, a situation that continue into midday before pulling back in the early afternoon, touching intraday lows of 32,516.05 basis points from its highs of 32,713.13bps. It rebounded late afternoon to close the day higher at 32,700.12bps on a low volume traded.

Monday’s market technicals were positive and weak with low volume traded, which was lower than previous session’s in the midst of a positive breadth and high buying sentiment. This was revealed by Investdata’s Daily Sentiment Report, showing a buy volume of 93% and sell position of 7% on a daily transaction volume index for the day at 0.61.

The energy behind the day’s market performance was high, despite the down market as shown by money flow index at 92.44 points, up from previous day’s 89.bps, indicating that funds are still entering some stocksgenerally.

Index and Market Cap
The NSE All Share index gained 184.60bps, closing at 32,700.02bps, after it opened at 32,515.52bps, representing a 0.57% growth, while market capitalization rose by N68.84bn to close at N12.19tr, from the opening value of N12.13tr. This represented a 0.57% value loss.

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Market upturn for the session was impacted by price appreciation of stocks like: Dangote Cement, Nigerian Breweries, Guaranty Trust Bank, Zenith Bank, UBA and Dangote Sugar, among others. This impacted positively on Year-to-Date gains that rose to4.04%, while market capitalization climbed to N384.78bn, from the year’s opening level of N11.72tr, representing a 4.04% growth.

Bullish Sectoral Indices
All sectoral performance indices were in the green, with NSE Consumer Goods and Insurance rising by 1.23% and 1.13% respectively to close higher. Market breadth remaining positive as advancers outpaced decliners in the ratio of 25:8.

Market activities were however mixed as volume was down by 0.75% to 219.81m shares, as against the previous day’s 221.47m units, while value rose by 147.72% to N5.55bn from Friday’s N2.24bn. 

Volume was driven by financial and consumer goods stocks like: Nigerian Breweries, Diamond Bank, Access Bank, Guaranty Trust Bank and FCMB.

Dangote Flour and ABC Transport were the best performing stocks for the day, chalking 9.95% and 9.62% respectively to close at N11.05 and N0.57 per share on market sentiments. The flipside was led by Union Diagnostic and Total Nigeria, which shed 6.45%% and 2.56% respectively to close at N0.29 and N190.00 each, on profit taking and market forces.

Market Outlook
As certainty returns to the market after the elections, we expect more earnings reports. This will expectedly have positive influence on the market if the numbers and rewards beatexpectations, despite profit taking and volatility that will continue. Investors and traders also should continue their repositioning for the 2019 dividend declaration season and post-election rally expected to shape market performance in the interim.

We advise cautious trading and investing while positioning in fundamentally sound equities.
Volatility will also continue as investors and fund managers reposition their portfolios, with eyes fixed on earnings reports, but 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.

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Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
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ambrose.o@investdataonline.com
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Tel: 08028164085, 08032055467
https://investdata.com.ng/2019/02/ngse-indicators-behave-to-type-as-emerging-vote-count-favour-ruling-apc/