NGSE Indicators Fail To Confirm Rebound, As Investors Play Safe, Expect Guidance From Q1 Data

Market Update for April 15
Trading activities on the Nigerian Stock Exchange on Monday was yet volatile, closing lower, even as it cut short the seeming uptrend expected to confirm the real recovery after three sessions of upmarket. The profit booking which halted the trend was not surprising, given that the market is still looking to positive factors like the expected Q1 numbers, government policy, and liquidity to support the recent reversal.

Monday’s trading opened higher in the morning but drifted lower and at one point swung from intraday high of 29,630.86 basis points, to a low of 29,484.93bps. It bounced around all afternoon, and in the last minute closed to the downside.
However, despite profit taking that hit the market, breadth remained positive in the midst of mixed sentiments.

As we discussed last week, the position of Q1 earnings likely to hit the market this week, as well as economic data, especially the March inflation figure released Tuesday morning, will determine the next line of action. Note that the market low liquidity continues to pervade the market, just as confidence level remains weak and needs to be stimulated.
Little insight has already been given, with the impressive numbers from the Infinity Mortgage Bank. The market was looking for earnings contraction from weak economic activities, despite the expansion of PMI for the same period.

Market technicals for the day were negative but mixed with volume traded lower than the previous day in the midst of positive breadth and strong selling sentiments. This was confirmed by Investdata’s daily sentiment report that shows a 77% sell volume and 23% buy of the total daily transaction volume index of 0.59.

The momentum behind the day’s market performance was very weak but is looking up as shown by Money Flow Index of 22.24 points, from the previous day’s 19.60bps. This indicates a gradual inflow of funds to the market, despite the seeming increase in demand for stocks.

Index and Market Cap
At the end of Monday’s trading, the benchmark NSE All-Share Index shed 69.99bps, closing at 29,495.91bps, after opening at 29,565.90bps, representing a 0.22% decline. Market capitalization dropped by N25.92bn to N11.08tr, from its opening value of N11.10tr, also representing 0.22% value loss.

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The session downturn resulted from profit-taking in banking and other stocks like Dangote Cement, Nestle, FBNH Holding, UBA, Flour Mills, Oando and Honeywell. This impacted negatively on the Year-to-Date loss, increasing it marginally to 6.16%, just as market capitalization dropped further to N586.21bn, or 5.28%, from the opening level of N11.72tr.

Mixed Sector Indices
The sectoral performance indexes for the day were largely bullish, except for the NSE Banking and Oil/Gas that were in red, while others closed green, led by the NSE Consumer and industrial Goods indexes with 1.33% and 0.56% respectively. Market breadth was positive as advancers outweighed decliners in the ratio of 26:17.

Market activities in volume and value were down by 3.86% and 9.51% respectively to 223.78m shares worth N1.79bn, as against previous day’s 232.77m units valued at N2.01bn.Volume was driven by financial services and ICT stocks like Sovereign Trust Insurance, Chams, UBN, Guaranty Trust Bank and UBA.
Initiate Plc and Dangote Flour Mills were the best-performing stocks for the day, gaining 9.59% and 9.52% respectively while closing at N0.80 and N9.20 per share on market forces and sentiments. ABC Transport and AG Leventis lost 10% and 9.68% respectively, closing at N0.36 and N0.28 respectively, on profit taking and market forces.

Market Outlook
We expect a mixed performance depending on market forces ahead of Q1 numbers and as traders react to the inflation data for March released Tuesday morning, expected to give insights into how this year’s outlook after seeing the weak 2018 financials.
Investors look to government’s policy direction as the market faces low liquidity problems in the ongoing earnings reporting season, vis-à-vis market and economic fundamentals.
Given the drop in the prices of major blue chips in recent times, creating entry opportunities, we expect speculative trading to shape the market direction going forward.

The volatility witnessed from last week until Tuesday was driven by traders and investors repositioning ahead of dividend declaration by major listed companies.
The ongoing volatility will continue as investors and fund managers rebalance their portfolios, with eyes fixed on political space and ongoing full year company earnings position and post-election market dynamics. Investors should review their positions in line with their investment goals, the 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 to 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.

We appreciate all the participants and facilitators that made our Port Harcourt Chart Summit a success. Believing all the strategies discussed will impact positively on their trading if implemented.

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Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
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Tel: 08028164085, 08032055467
https://investdata.com.ng/2019/04/ngse-indicators-fail-to-confirm-rebound-as-investors-play-safe-expect-guidance-from-q1-data/