NGSE Indicators May Sustain Reversal, Mixed Trading, Profit-Taking, Ahead Of Dividend News

Market Update for February 11
The Nigerian Stock Exchange’s benchmark All-Share Index signaled the resurgence of new strength at the close of Tuesday’s trading as volatility and mixed performance continued, halting two previous sessions’ of bear-run on gradual improvement in demand for companies with impressive Q4 numbers. Investors also focused on high dividend-paying stocks that are currently undervalued due to recent corrections, just as Tuesday’s pullback coincided with major announcements regarding the demutualization of the NSE, including the change of name to Nigerian Exchange Group Plc and other subsidiary companies (READ MORE) and its transformation from a company by guaranty, as well as the share allocation (READ MORE).

Technically, the market resisted further decline as revealed by the candlestick formation at the end of the trading session, even as the index had broken down the 27,702.30 basis points to test 27,637.33bps before the rebound. The confirmation of this reversal is a function of market forces at Wednesday’s trading session, as a capital wave in the financial market is not favouring equity trading, despite the relatively low interest in the money market. Going by the strongly bearish stand, it can easily be assumed that the said support level will be fully challenged by the bears when the expected full-year corporate earnings start hitting the market.

Meanwhile, Tuesday’s trading opened on the downside into the mid-morning before rebounding between midday and the afternoon on bargain hunting in high cap stocks, a situation that pushed the benchmark index to an intraday high of 27,936.16bps, from its low of 27,637.33bps. It thereafter adjusted up to close the session higher at 27,871.90bps on less than average traded volume.
Market technicals were positive and mixed, as volume traded was higher than the previous session’s in the midst of market breadth favouring the bear and positive buying sentiment as revealed by Investdata’s Sentiment Report showing 78% ‘buy’ volume and 22% ‘sell’ position. The total transaction volume index stood at 0.78, while the energy behind the day’s performance was seriously weak, as the Money Flow Index inched up to 10.08 points from the previous day 9.94 point, indicating that funds enter the market and some stocks

Index and Market Caps
At the close of the day’s trading, the composite NSEASI gained 99.71bps, closing at 27,871.90bps from its 27.773.16bps opening, representing 0.36% gain, just as market capitalization climbed N51.93bn up, closing at N14.52tr, from the N14.46tr opening figure, which also represented a 0.36% value gain.
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The session upturn was impacted by positioning taking in low, medium and high cap stocks like, MTNN, Zenith Bank, FBNH, UACN, Lafarge Africa, Oando, Cadbury, Fidelity Bank andJapual Oil, among others, which impacted positively on the NSE’s Year-To-Date gain, as it increase to 3.84%. Market capitalization, YTD, gain inched up to N1.52 trillion, representing 11.32% growth over the year’s opening value.

Bearish Sector Indices
The sectoral performance indexes were largely bearish, except for the NSE Oil/Gas that closed 0.05% higher, while the NSE Consumer Goods led the decliners after losing 1.92%, followed by Insurance and Banking with 0.55% and 0.35% respectively.
Market breadth was negative as decliners outnumbered advancers in the ratio of 17:13, while market activities in volume and value traded inched by 38.92% and 93.21% respectively to 276.27m shares worth N1.92tr, from the previous day’s 200.16m units valued at N1.92bn. Volume was driven by transactions in UBA, Guaranty Trust Bank, Zenith Bank, Japaul Oil, and Ecobank Transnational Incorporated.
The best-performing stocks for the day were UACN and Japual Oil, gaining 9.30% and 8.33%, closing at N9.30 and N0.26 per share, on the strength of earnings expectations and market forces. On the flip side, SKYAVN and Caverton lost 9.89% and 9.89% respectively, closing at N3.37 and N2.65 on selloffs and profit-taking.

Market Outlook
We expect the market to sustain its reversal, despite the likely continuation of the mixed intraday movement in the midst of profit-taking, with investors buying in the dip ahead of dividend news. This is also against the backdrop of the fact that the capital wave in the financial market may persist in the midst of the unstable economic outlook for 2020.
Also, investors and traders are positioning in anticipation of the 2019 full-year earnings reports, amidst the changing sentiments in the hope of improved liquidity and positive economic indices which may reverse the current trend.
We see investors focusing on the upcoming full-year earnings season, targeting companies with strong potential to grow their dividend on the strength of their earnings capacity.

Again, the current undervalued state of the market offers investors opportunities to position for the short, medium and long-term, which is why investors should target fundamentally sound, and dividend-paying stocks for possible capital appreciation in the New Year.
This was noted in the 10 golden stocks and trading ideas for 2020, as discussed extensively during the Investdata 2020 Traders & Investors Summit held in Lagos last December.
Also, traders and investors need to change their strategies, because of the NSE’s pricing methodology, the CBN directives and their impact on the economy in the nearest future.
Meanwhile, the Investdata team welcomes you to a bullish 2020. The home study packs of our Invest 2020 Opportunities and Trade Ideas Summit, containing the 10 Golden Stocks for 2020 are available. To obtain your pack send ‘Yes’ or ‘Stock’ to 08028164085, 08032055467, 08111811223 now.

Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467
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