Sees Inflow Rise, As Investors Digest 2020Q1 Financials, Outlook Remains Hazy

Market Update for April 29

Midweek’s trading on the Nigerian Stock Exchange (NSE) turned on its head as inflows to equity assets surpassed the January 13 peak of 83.65 points, rising to 88.52 points as revealed by Money Flow Index at the close of the day trading.

The benchmark All-Share index closed positive for fourth consecutive trading sessions as equity prices close higher on positive sentiment and buying interest in medium and large-cap stocks. Also, more corporate earnings continued to flow into the market with mixed performance as revealed by the numbers.

The positive close was equally despite the high level of uncertainty in the economy amidst the increasing number of new cases of the novel Coronavirus pandemic, as a result of which there has been a cocktail of the stimulus packages from both the government and Central Bank of Nigeria (CBN). The various interventions are targeted at critical sectors of the economy to mitigate the impact of the pandemic on businesses and Nigerians, among others.

During Wednesday’s quarterly numbers came in from MTNN, Seplat, Zenith Bank, Union Bank, FCMB, Custodian Investment, and Viafoam, some of which came below expectations.

As we noted, recently the NSE index has been trading above its 20-DMA after forming a cup and handle chart pattern that supports an uptrend and is heading to cross the 50 DMA, which is the blue line on the chart above in the new month, as funds continue to enter the market, knowing that many companies have their dividend qualification date in May.

Meanwhile, trading started on the upside and was sustained throughout the session, despite the oscillation on position-taking that pushed the NSE’s composite index to an intraday high of 22,884.49 basis points, from its low of 22,727.87ps. Thereafter, it closed higher at 22,868.40ps on less than average traded volume.

Market technicals were positive and strong with higher traded volume than the previous session, in the midst of positive breadth and sentiment as revealed by Investdata’s Daily Sentiment Report, showing a ‘buy’ volume of 90% and sell position of 10%. 

Total daily transaction volume index stood at 0.83, just as momentum behind the day’s performance stayed strong with Money Flow Index reading 88.52 points, up from the previous 84.54ps, indicating that funds entered some stocks and the market.

Index and Market Caps
At the end of the session, the key performance index gained 140.53 basis points, closing at 22,868.40ps from the opening level of 22,761.23bps, representing a 0.62% growth, while market capitalization rose by N73.24bn to close at N11.92tr from an opening value of N11.84tr, representing a 0.62% growth in investors’ portfolios.

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Take advantage of this service to buy right and sell right at this current market oscillation and earnings reporting season for portfolio realignment and positioning as we await an economic reform policy to stimulate and re-track the economy again.

The day’s upturn was impacted by buying interest in MTNN, Guaranty Trust Bank, Access Bank, FBNH, Lafarge Africa, Ardova, UBA, UACN, and Vitafoam. This impacted positively on the benchmark index reducing its Year-To-Date loss to 14.80%, while market capitalization YTD stood at N1.15tr, representing a 7.31% drop from the year’s opening level.

BullishSector Indices
All the sectorial performance indexes were bullish, except for the NSE Insurance that closed 0.21% down, while the NSE Oil/Gas index led the advancers after gaining 0.43%, followed by the NSE Consumer Goods, Industrial and Banking indexes rose by 0.40%, 0.26%, and 0.22% respectively.

Market breadth, remained positive as advancers outnumbered decliners in the ratio of 14:12, while market activities in terms of volume and value were mixed as volume climbed by 4.05% to 277.43m shares from the previous day 266.63m units.

Transaction valued fell by 7.27% to N2.55bn from N2.75bn recorded on Tuesday, boosted by trading in FBNH, UBA, LASACO, Guaranty Trust Bank and Zenith Bank.
Courteville Business Solution and Vitafoamwere the best-performing stocks, after gaining 10% and 9.96% respectively, closing at N0.22 and N4.96 per share on market forces and impressive Q2 numbers. On the flip side, Eterna and University Press lost 9.62% and 7.62% respective, closing at N2.16 and N0.97per share respectively, on selloffs.

Market Outlook
We expect this trend of up and down movement to continue with profit and position-taking as players digest corporate earnings released so far and economic data, ahead of more corporate scorecards, even as MFI revealed smart money portfolios repositioning in the midst of crashing and oscillating oil prices.

However, the market’s high dividend yield continued to attract buying interests, while more audited corporate earnings hit the market going forward, 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 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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