Seeming Lull May Continue On NGSE, As Earnings Season Fail To Sway Investors

Market Update for March 7
It was yet another negative trading session Thursday on the Nigerian Stock Exchange (NSE), as the benchmark index consolidated its losing position arising from continued selloffs across sectors. The decline continues to defy the ongoing earnings reporting season and prevailing high yields, as equity prices decline in the face of mixed corporate earnings and low liquidity.

There is also the impact of low liquidity as smart money had quickly exited the market following the February 23 presidential poll outcome, resulting in low level of activities and sluggish share price movements, with many investors engaging in flight for safety. They may however be waiting in the wings for the Federal Government’s next line of action by way of fiscal policy reforms.

Trading opened slightly to the upside in the morning session, but oscillated between mid-morning and midday before pulling back by afternoon to close lower on improved traded volume. The benchmark NSE All-Share index bounced around all morning, reaching a high of 32,151.87 basis points around the noon hour. It then rolled over and stair-stepped down the rest of the afternoon to touch intraday low of 32,041.74bps, closing the session on a negative note. The NSEASI was down 111.68bps at 32,049.73 on high selling pressure at the time trading close by 2.30pm.

During the trading session Stanbic IBTC Holdings released its audited financials for the full-year ended December 31, 2018, declaring a final dividend of N1.50 per share, in addition to the interim dividend of 100 kobo earlier paid, bringing total dividend for 2018 to N2.50 per share. The scorecard for the period was mixed, as gross earnings inched 4.7% up, while bottom line rose 54% on the back of increased trading income, other incomes and loan loss write back. The market expectedly reacted to the scorecard, leading to its 3.0% gain at the close of trading (READ).

Market technicals for the day were negative but mixed, with higher traded volume in the midst of negative breadth and sentiments, as revealed by Investdata’s Daily Sentiment Report, showing a sell volume of 93% and buy position of 7% on a daily transaction volume index for the day at 0.60.
Momentum behind the day’s market performance were down sharply , reflecting selling pressure as shown by the money flow index at 43.84points, from previous day’s 55.218bps, indicating that more funds are still leaving some the market.

Index and Market Cap
NSE benchmark index lost 111.68 points from the day’s 32,121.74bps opening figure, representing a 0.35% decline; while market capitalization drop by N41.65bn to at N11.95tr, from an opening value of N11.98tr, also representing a 0.35% value loss.
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The day’s downturn was influenced by selloffs in medium and high cap stocks like, Dangote Cement. 11 Plc, Guaranty Trust Bank, Zenith Bank, Dangote Sugar, Flourmills, UACN, Oando, Access Bank, Dangote Flour, UBN and Honeywell, among others. This impacted negatively on Year-to-Date gains, leaving it at 1.84%, and market capitalization at N203.49bn, from the year’s opening level of N11.72tr, representing a 1.84% growth.

Bearish Sector Indices
All the sectoral indices closed in the red; just as market breadth was negative as decliners outpaced advancers in the ratio of 26:9.
Market activities were mixed as volume was up by 4.94% to 218.9m shares, as against 208.6m units on Wednesday, while value fell by 1.44% to N2.74bn from the previous day N2.78bn, with volume driven by financial services stocks like: Zenith Bank, Access Bank, FBNH, Guaranty Trust Bank and UBA

Cadbury and Dangote Flour were the best performing stocks for the session, gaining 7.84% and 4.13% respectively to close at N11.00 and N11.35 per share, purely on market sentiment and forces. The flipside was led by University Press and United Capital, which shed 9.78%% and 9.09% respectively to close at N2.03 and N3.00 each, on profit booking and market forces.

Market Outlook
The seeming lull in the market and profit taking may continue in the midst of more earnings expectation being the last trading for the week, amidst the continuing wait-and-see attitude of some players. 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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