Mixed Session Still, As Smart Money Repositions Portfolios Ahead Of Economic Data, Oil Price Dynamics

Market Update for April 23
Equity prices on the Nigerian Stock Exchange (NSE), on Thursday, reversed gains of the previous session as profit-taking among high cap stocks resurfaced on mixed sentiment dragging the benchmark All-Share index lower on a low traded volume. This was despite the continued buying interest in banking stocks, while investors await the release of more Q1 financials and the annual general meetings to consider the 2019 results, as well as approval for payment of dividend announced earlier.

This coincided with a seeming recovery of oil price after the historic crash, even as it continues trading below its 2020 opening price of $61 per barrel, amidst the continued spread of the Coronavirus (COVID-19) pandemic across the globe.
United Bank for Africa and Access Bank released their Q1 results which were mixed but above market expectation, alongside that of Chemical Allied Product which came with a decline in profit.

As we earlier noted, in the midst of this oscillating trend, the divergence in market performance and economic situation, smart money continues to push prices up and down, while investors continue to review the emerging 2019 full-year and 2020 quarterly earnings reports. This is typical of a recovering market and should not result in any form of panic selling.

However, as we noted some days ago, this should rather offer an opportunity for intelligent investors and traders who missed out in the earlier recovery moves to take advantage of any correction for realigning their portfolios. Also, Money Flow index continues to look up from low 7.98 points on April 3, 2020, to 63.98 points, indicating that smart money is entering the market, irrespective of the prevailing economic challenges. This suggests that market players should invest knowledgeably to protect their investable capital.

Thursday’s trading opened marginally on the upside in the morning and pulled back to oscillate throughout the day on profit-taking in Industrial and consumer goods stocks and others. This pushed the NSE’s composite index to an intraday low of 22,407.60basis points, from its high of 22,805.14ps, before closing lower at 22,470.79ps on a positive breadth

Market technicals for the day were negative and mixed as volume traded was higher than the previous session, in the midst of positive breadth and selling pressure as revealed by Investdata’s Daily Sentiment Report, showing a ‘buy’ volume of 16% and sell position of 84%. Total daily transaction volume index stood at 0.47, just as the impetus behind the day’s performance slow down slightly with Money Flow Index reading 63.10 points, up from the previous 63.98ps, indicating that funds left some stock and market.

Index and Market Caps
The composite NSEASI, closed Thursday’s trading lower after shedding 309.51 basis points to close at 22,470.79ps from the opening figure of 22,780.30ps, representing 1.36% decline, while market capitalization shed N161.3bn at N11.71tr from an opening value of N11.87tr.

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Take advantage of this service to buy right and sell right at the current market recovery ahead of full-year earnings reporting season portfolio reshuffling and repositioning as we await an economic reform policy to stimulate and re-track the economy again.

The day’s decline was caused by profit-taking and selloffs in high highly capitalized stocks like Nestle Nigeria, Dangote Cement, BUA Cement, Guinness, Dangote Sugar, and Ecobank Transnational Incorporated. These impacted negatively on the NSE index and increased Year-To-Date loss to 16.29%, while market capitalization YTD stood to N1.35tr, representing a 9.01% drop from the year’s opening value.

Bearish Sector Indices
Performances across sectors were largely bearish, except for the NSE Banking index that closed higher by 0.71%, while the NSE Industrial Goods index led the decliners after losing 3.82%, followed by the NSE Consumer Goods that fell by 3.30%, while Oil/Gas and Insurance dropped 0.20% and 0.07% up respectively.

Market breadth, remained positive as advancers outnumbered decliners in the ratio of 17:15, just as transactions in volume and value terms were up by 8.17%% and 81.58%% respectively, after investors exchanged 201.47m shares worth N3.36bn, from the previous day’s 186.23m units valued at N1.85bn. This volume was boosted by trading in Access Bank, FBNH, Zenith Bank, United Capital, and Guaranty Trust Bank.

Jaiz Bank and Cadbury were the best-performing stocks, after gaining 10% and 9.52% respectively, closing at N0.55 and N6.90 per share on the strength of the dividend declared and market forces. On the flip side, Skypower Aviation and Union Diagnostic lost 8.29% and 6.5% respective, closing at N1.80 and N0.29 per share respectively, on selloffs and profit-taking.

Market Outlook
Being the last trading session of the week, expect mixed performance on Friday, as profit and position-taking continue on mixed sentiments ahead of more corporate earnings, even as smart money repositions portfolios in the midst of crashing and oscillating oil prices.

However, the market’s high dividend yield continues to attract buying interests, while more audited corporate earnings hit the market going forward. This is despite the likely continuation of selloffs, with investors buying to increase their positions in undervalued stocks ahead of dividend declaration and Q1 numbers. This is also against the backdrop of the fact that the capital wave in the financial market may persist in the midst of relatively low-interest rates in the money market, high inflation, and 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 undervalue 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.

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 home study packs of our Invest 2020 Opportunities and Trade Ideas Summit, containing different Stocks for various investment objectives in 2020 and beyond 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
amberose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467

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