NGSE Outlook Mixed, As Investors Digest Q1 Numbers, Await 2019Q1 GDP, Budget Passage

Market Update for April 29
Monday’s trading activities on the Nigerian Stock Exchange (NSE) extended the bearish mood, into the week amidst caution by investors as the Q1 earnings season winds down to ushers in fresh opportunities for portfolio reshuffling and repositioning for the new month, bearing in mind the weak numbers and mixed performance posted so far.

It is expected at this point that market players are looking forward to various economic developments and individual equities’ fundamental positions and news, which are likely to keep the market in this oscillation wave until end of Q2 as the government prepares for a new dispensation. This is just as the 2019 federal budget has not been passed into law by outgoing National Assembly, barely one month to the end of its four-year lifespan.

We therefore recommend that traders should be fully abreast of both economic and individual equity’s fundamental developments as they combine fundamentals and technical tools in making their investment decisions.

The NSE benchmark All-Share Index opened for the day trading with slight upside movement, before coming down by the mid-morning to early afternoon, and then touched intraday lows of 29,476.29 basis points from its high of 29,813.37bps. It then retraced up, finishing the session at 29,521.06bps on bargain hunting for consumer goods and Insurance stocks like Dangote Flour Mills, Cadbury, Vitafoam, Nigerian Breweries, NEM, Aiico, Wapic, Veritaskapital Insurance and Regency Assurance.

Monday’s market technicals were negative and mixed with higher volume than previous day’s in the midst of flat breadth and selling pressure as revealed by Investdata’s daily sentiment report that shows a sell position of 84% and buy volume of 14% of the total daily transaction volume index of 0.74.
The momentum behind the day’s market performance was relatively strong but is looking down as shown by Money Flow Index of 51.94 points, from previous day’s 59.93bps, indicating a gradual exit of funds from the market as selloff hit blue chip stocks to reflect the Q1 earnings position of these companies.

Index and Market Cap
At the end of day’s trading, the NSE All-Share index lost 210.35bps, closing at 29,521.06bps, after opening at 29,740.41bps, representing a 0.74% decline, just as market capitalization fell by N82.44bn to N11.1tr from its opening value of N11.18tr, also representing 0.74% value loss.

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The session’s downturn was driven by sell down in stocks like: Dangote Cement, Total Nigeria, Stanbic IBTC, Guaranty Trust Bank, Zenith Bank, UBA, UACN, Dangote Sugar, Oando, Eterna and Honeywell Flour, among others. This impacted negatively on the Year-to-Date loss, increasing it to 6.08%, just as market capitalization growth reduced to N626.21bn, or 5.34%, from the year’s opening level of N11.72tr.

Mixed Sector Indices
Sectoral performance indexes for the day were largely bearish, except for the NSE Insurance and Consumer goods that closed higher, while the NSE Industrial goods and banking indexes slipped 2.99% and 1.15% down respectively. Market breadth was slightly negative as decliners outnumbered advancers in the ratio of 26:25.

Market activities in volume and value were up by 18.26% and 42.65% respectively to 290.19m shares worth N2.16bn, as against previous day’s 240.16m units valued at N1.46bn. Volume was driven by financial services, service providers and oil stocks like Japaul oil, Caverton, UACN, Access Bank and FBN Holdings, as investors continued reacting to their Q1 numbers.

VeritasKapital Insurance and Dangote Flourmills were the best-performing stocks for the day, gaining 10% and 9.97% respectively and closing at N0.22 and N17.10 per share, on market forces and the ongoing acquisition offer by Olam International. On the flip side, CCNN and May & Baker lost 9.71% and 8.89% respectively, closing at N15.35 and N2.05, on seemingly weak Q1 earnings and market forces and the markdown for 20kobo dividend proposed by the board respectively.

Market Outlook
We expect the mixed performance to continue as market player digest Q1 numbers that had hit the market so far in the light of the expected 2019Q1 GDP and budget passage today.
Investors look to government’s policy direction as the market faces low liquidity problems in the ongoing Q1 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 Thursday was driven by traders and investors repositioning ahead of Q1 corporate earnings from the major listed companies.

The ongoing volatility will continue as investors and fund managers rebalance their portfolios, with eyes fixed on political space and ongoing quarterly 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.

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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-outlook-mixed-as-investors-digest-q1-numbers-await-2019q1-gdp-budget-passage/