NGSE Indicators Fail To Find Support From Uninspiring Score-cards, Payouts

Market Update for March 6
Midweek’s trading on the Nigerian Stock Exchange (NSE) closed red, halting three consecutive sessions of bull transition on a mixed sentiment and low traded volume, with selling pressure in the consumer, industrial and oil/gas sectors due to mixed numbers posted by Seplat Petroleum Development Company and Nestle Nigeria. Both earnings scorecards came below market expectation, besides disappointing many analysts, considering, for example, their low dividend yields.

In spite of the seeming high payout, investors did not react to the dividend announced by both stocks due to the high market price of these equities, even as they continue to watch the body language of newly re-elected President Muhammadu Buhari of Nigeria’s ruling All Progressives Congress (APC) and hope for changes in economic policies and reforms to chart a new course for economic growth and development.
Trading for the day started out on a downside in the morning. This was sustained throughout the session as sell-offs ensued at midday and found some support within an hour, before a very sharp rally, after touching intraday low of 32,062.03 basis points, from its high of 32,173.66bps, which basically was the opening point. It then finally closed at 32,121.74bps on a negative market breadth.

Meanwhile, Guaranty Trust Bank, the biggest bank by market capitalization on the NSE, published its audited financials for the full-year ended December 31, 2018, after trading hours on Wednesday, offering a final dividend of N2.45 per share, in addition to the interim dividend of 30 kobo earlier paid, bringing total dividend for 2018 to N2.75 per share. The scorecard for the period was flat, with a marginal decline in top line, while bottom line inched up slightly on the strength mainly of a drop in loan loss provision, among others (READ HERE).
Wednesday’s market technicals were weak but mixed, with lower traded volume than previous session in the midst of negative breadth and mixed sentiments, as revealed by Investdata’s Daily Sentiment Report, showing a buying position of 53% and selling volume of 47% on a daily transaction volume index for the day at 0.57.
Forces behind the day’s market performance were down, reflecting some selling pressure as shown by the money flow index at 55.21 points, from previous day’s 61.18bps, indicating that funds are still leaving some stocks and the market.

Index and Market Cap
The NSE All Share Index shed 51.92 points to close at 32,121.74bps, after opening at 32,173.66bps, representing a 0.16% decline; while market capitalization fell N19.36bn to at N11.98tr, from an opening value of N11.99tr, also representing a 0.16% value loss.
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Wednesday’s downturn was impacted by selloffs in medium and high cap stocks like, Zenith Bank, Seplat, FCMB, PZ Cussons, Diamond Bank, Dangote Flour, Cadbury, CCNN, and Dangote Sugar, among others. This impacted negatively on Year-to-Date gains, leaving it at 2.20%, and market capitalization at N245.44bn, from the year’s opening level of N11.72tr, representing a 2.21% growth.

Mixed Sector Indices
The sectoral performance indices were largely bearish, except for the NSE Banking and insurance that closed 0.03% and 0.02% green respectively; just as market breadth was negative as decliners outpaced advancers in the ratio of 20:8.
Market activities in volume and value were down by 47.96% and 19.65% respectively to 208.6m shares worth N2.78bn, as against previous session’s 400.87m units valued at N3.46bn, driven by financial services and conglomerates stocks like: Zenith Bank, Guaranty Trust Bank, Fidelity Bank, Access Bank and Transcorp.
Consolidated Hallmark Insurance and Jaiz Bank were the best performing stocks for the session, after gaining 7.68% and 5% respectively to close at N0.28 and N0.63 per share on market sentiment and forces. The flipside was led by McNichols and Etranzact, which shed 10%% and 9.90% respectively to close at N0.54 and N2.64 each, on profit booking and market forces.

Market Outlook
We expect the volatility and profit taking to continue in the midst of more earnings expectation. Investors and traders also should continue their repositioning for 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 also that investors should 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
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