Mixed Trend May Continue On Q1 Earnings, GDP Data Expectations, Rising Yields
Market Update for April 12
The oscillating sentiments and trend on the Nigerian Stock Exchange continued Monday with the composite All-Share index closing lower on a negative breadth and low traded volume, an indication that the market is struggling to find direction, while resisting further decline.
As investors, expect good news from the Q1 earnings season, especially among the hot sectors and companies that beat market expectations in their full-year earnings performance, without forgetting consumer goods makers, as the economy opens up and events unfold. It is noteworthy also that as many companies prepare to release their quarterly earnings statement, all eyes are on these numbers, and the expected impact on medium and low cap stocks is likely to be higher than that of highly capitalized equities.
This is due to their higher prices and lower yields, added to the lack of volume needed to change price as a result of their relatively low liquidity in the market, added to the ongoing circular flow of funds in low risk assets, while Treasury Bills rates and bond yields remain bullish at a time the equity market enters another earnings reporting season.
The unclear economic policy of the government and the growing level of insecurity in the system continue to reflect on the nation’s economic indices as published by the Central Bank of Nigeria (CBN), and the National Bureau of Statistics (NBS).
These are pointers to the fact that all is not well with the economy, despite the seeming recovery, as confirmed by the continued mixed and unimpressive data. Investdata believes that the time has come for managers of the economy and policy makers to rethink and make policies that will complement each other to achieve a common purpose or goal.
Consequently, players in the equity market should invest wisely, guided by set investment objectives, especially entry and exit strategies to survive and profit from the expected new trend. By so doing, should the Q1 earnings reports and corporate actions fail to impact and support recovery, a big rotation in sector trends should also guide you, going into the future.
Meanwhile, Monday’s trading opened slightly on the downside and it was sustained for the rest of the session on profit-taking in blue-chips stocks that rallied recently to pull back the key performance index. The index touched an intraday low of 38,712.55 basis points from its highs of 38,866.39bps, before closing below its opening point at 38,712.55bps.
Index and Market Caps
At the end of Monday’s trading, the benchmark index shed 153.46ps, closing at 38,712.55bps after opening at 38,866.39bps, representing a 0.40% decline, just as market capitalization fell by N81.34bn, closing at N20.25tr, which also represented 0.37% value loss. This is lower than what the index lost due to the additional 2.43bn shares of eTranzact listed on the exchange at N1.50 each.
Attention: If you have not signed up for Investdata buy and sell signal setup, don’t delay. We have just reduced to 8 STOCKS TO WATCH THAT ARE BUILDING NEW BULLISH BASE in our watchlist. These stocks are with double potentials to rally considering their current and oscillating mood of the market value.
To become a member, send ‘YES’ or ‘STOCKS’ to the phone numbers below. Take advantage of this service to buy right and sell right at the current oscillating market in the midst of earnings season, portfolio reshuffling and repositioning as we await an economic reform policy to stimulate and re-track the economy again.
Monday’s downturn was due to profit booking from stocks like Stanbic IBTC, NB, Guinness, Okomu Oil, PZ Cussons, Custodian Investment, Dangote Sugar, UBA, Oando and International Breweries, among others. This impacted negatively on Year-To-Date loss, which increased to 3.87%, just as market capitalization loss stood at N786.98bn, or 3.64% below its opening value for the year.
Mixed Sector Indices
Performance indexes across the sectors were mixed, as the NSE Banking closed 0.16% higher, while NSE Consumer goods led the decliners after losing 1.03%, followed by Insurance and Energy with 0.80% and 0.12% lower, while industrial goods was flat.
Market breadth was negative, as decliners outnumbered advancers in the ratio of 20:15; just as activity in volume and value were up after investors exchanged 194.02m shares worth N1.36bn.
Japaul Gold and UACN Property were the best performing stocks during the session, after gaining 9.52% and 9.33% respectively to close at N0.69 and N0.82 per share respectively on market forces. On the flip side, Stanbic IBTC and Guinness Nigeria lost 9.94% and 9.93% respectively, closing at N43.50 and N26.75per share, on profit taking and selloffs
Market Outlook
We expect the mixed trend to continue as Q1 corporate earnings start to hit the market as from next week in the face of rising yields and portfolio repositioning ahead of economic data like inflation rate, PMI and Q1 GDP. Also, the market has failed to move out of its trading range, as index and price action may be the way of discounting the prospects for high cap companies as well as blue chip stocks ahead of earnings season.
The pullbacks offer bargain hunters and income investors another opportunity to reposition in high dividend yields and undervalued stocks, while looking out for quarterly numbers that would support recovery. This is based on the fact that the rising fixed income yields may not be enough to scare all investors away from the equity market.
Again, the way to go is: Target dividend-paying stocks and fundamentally sound companies with growth prospects in 2021, looking the way of mispriced equities. This is especially given the rising oil prices that have so far supported the economy and equity market, despite the seeming improvement in the fixed income yield which had remained at negative real rate of return due to the subsisting high inflation.
However, the strong and faster recovery may continue, depending on market forces, going forward, as propelled by 2020 full numbers and expected 2021 Q1 earnings reports, until the next MPC meeting in May.
The NSE’s index action and indicators are heading in the same direction on a low traded volume and positive buying sentiments in the midst of rising yield in bond and TB.
Also, 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.
Meanwhile, the home study packs on INVEST 2021 New Opportunities & New Paths To Profits Summit materials and 10 Golden Stocks for 2021, Strategies and How to invest profitably in this Changing Market Dynamics/ Recession, Mastering Earnings Season For Profitable Investing and Trading in any market situation/ cycles, Life Beyond COVID 19 Investment Opportunities In The Stock Market are now available. To obtain your pack send ‘Yes’ or ‘Stock’ to 08028164085, 08179547605, 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
Comments
Post a Comment