Volatility Still, As Investors Align Portfolios For 2019 Dividend Season, Sound Fundamentals

Market Update for February 6

The benchmark All-Share index of the Nigerian Stock Exchange at the midweek gained for the
fourth trading day, closing higher ahead of a major economic report- the nation’s Q4 Gross
Domestic Product (GDP) and January inflation data. These are expected to hit the market next
week from the National Bureau of Statistics (NBS), just before the early filings of corporate
earnings and the Presidential election holding on February 16.
The expected earnings reporting season and increasing bargain hunting for blue chip stocks
supported the gains so far, as traded volume rose on strong buying interests during the session,
despite the high wave of volatility. The seeming bull transition, regardless of the countdown to
February 16 can be attributed to investors’ positive sentiment towards the expected new
economic policy and reforms that could influence the stock market and the economy at large.
Trading for the day started out on the upside but pulled back by the mid-morning to afternoon,
before retracing up on increasing demand for consumer goods stocks, not minding the weak
and poor earnings from the sector. The attraction seems to remain the low prices of these
stocks as a result of the huge losses suffered due to their weak disposable income.
However, the NSE index touched intraday highs of 30,825.20 basis points, from its lows of
30,728.01bps on a positive market breadth to close the session at 30,821.80bps,
Market technicals at the midweek were positive, as transacted volume was higher than
previous session’s in the midst of a positive breadth and sentiment as revealed by Investdata’s
Daily Sentiment Report, showing buy volume of 97% and 3% sell position. Volume index for the
day was 1.01
The momentum behind the day’s market performance was down, despite the up market as
shown by the 49.68bps money flow index, from previous day’s 53.92bps, an indication that
funds left some stocks and entered some others.
Index and Market Cap
At the end of Wednesday trading All-Share index gained 48.23bps to close at 30,821.80bps
having opened at 30,773.52bps, representing 0.16% growth; while market capitalization rose
by N17.99billion at N11.49 trillion from the opening value of N11.48 trillion. This represented a
0.16% value gain.
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The upturn resulted from improving demand for stocks like: Nestle, Unilever, Flourmills,
Guaranty Trust Bank, Zenith Bank, FCMB, Sterling Bank, United Capital, Dangote Sugar and
Flour, among others. This impacted positively on Year-to-Date loss, reducing it to 1.94%, while
the loss in market capitalization dropped to N191bn, from the year’s opening level of N11.72tr,
representing a 1.94% decline.
Mixed Sectors Indices
The performance of sectorial indexes were mixed, as the NSE Industrial goods and Oil/Gas that
closed in the red, while market breadth was positive with advancers outnumbering decliners in
the ratio of 19:17.
Market activities were equally up in volume and value by 88.68% and 64.848%, as 359.09m
shares worth N4.83bn, from previous day’s 190.32m units valued at N2.93bn. Transaction
volume was driven by financial services and oil stocks like: FBNH, Zenith Bank, Japual Oil, and
ETI.
The best performing stocks for the session were Learn African and Regency Insurance, which
gained 9.49% and 9.09% respectively to close at N1.50 and N0.24 respectively on market forces,
while on the flipside, Custodian Investment and Guinea Insurance took the lead, shedding
8.80% and 8.70% respectively to close at N6.20 and N0.21 each, on the back of market forces
and profit taking.
Market Outlook
This volatility and profit booking could continue, as investors and traders reposition for 2019
dividend declaration season which is expected to shape market performance after the
elections. We advise cautious trading and investing while positioning in fundamentally sound
equities.
Volatility will also persist as investors and fund managers reposition their portfolios, with eyes
fixed on political space and ahead of full year company earnings position and post-election
market dynamics. These are likely to drive prices north, or south, while determining market
direction before or after the Presidential Election.
Investors should review their positions in line with their investment goals, 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 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
RE:PORT HARCOURT 2019
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Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467