The Nigerian Stock market closed lower to continue its pullback on Wednesday as a result of negative sentiments in the just concluded earnings season that many analysts have dubbed ‘disastrous,’ as many companies posted red accounts for the period ended September 30, 2106. For the moment, market players are watching keenly, while seeking to reposition their trades and portfolio and ensure they make the best of this bad situation.
Nevertheless, the nation’s lone bourse joined other markets of the world to close in the red, following midweek’s shocking proclamation of U.S. Republican candidate winner of the November 8 election. Already, many see this as an indication of confidence crisis that can come in form of uncertainties in policies or reforms that accompany a change in government. This can however be remedied with time as the colour of the new leadership unfolds.
The situation is made worse for the Nigerian economy and market, which continue struggling to find direction as a result unclear policies and anti-recovery policy and statements.
Meanwhile the benchmark index of the Nigerian Stock Exchange (NSE) shed 190.58 basis points to close yesterday at 26,173.69 points, from an opening figure of 26,364.27 points, representing a 0.72% decline on a low volume of transactions to continue the bearish transition that commenced in the earnings season, due to weak market and economic fundamentals. Similarly, market capitalisation of listed equities shed N65.61 billion to close at N9.01 trillion from the opening value of N9.08 trillion, also representing 0.72% loss in value.
The NSE All Share Index Year-to-Date negative returns sank deeper to 8.62%, just as market capitalization has declined YtD by N840.54 billion.
Market breadth yesterday was negative as the number of decliners outpaced advancers in the ratio of 27:11 on a bearish mood, with buy position improving to 31% of total volume traded, while sell volume for the day decline to 69%.
Volume of trades dropped by 22.75% from 189 million shares worth N1.04 billion in the previous session to 146 million units valued at N1.60 billion, representing a 35% decline from the previous trading level.
Transactions in the shares of CHAMS, GUARANTY, UBA, FBNH, and ACCESS BANK topped the activity chart as most traded equities by volume.
NSEASI and all sector indices were down, except for the NSE Oil/Gas and NSE Industrial Goods that were up by 0.08 % and 0.10 % respectively.
DAILY TIME FRAME NSEASI
The NSEASI on a daily time frame continues a downward trend to break down the symmetric triangle chart pattern and MOVING to strong support level of 25,865.31 if market forces do not go positive. The momentum and trending ability of the market on a daily time frame is weak as ADX is below 20. The probability of the market remaining in this direction for the rest of the week is high as momentum is low. Once the doted trend line is broken it confirms a weaker market. The index is trading below its 20 and 50-Day moving average. Traders should watch out.
NSEASI has broken the 61.8% Fibonacci Retracement (23,308.84, 31,121.14). Please note that the Fibonacci covers the highest and lowest trading points in 2016. Relative Strength Index’s (RSI) and Bollinger Band signaled buy.
Analyst Opinion: Reversal is imminent as smart money cashes in on the ongoing market correction phase to reposition their portfolio for end of year and seasonal trend pattern, especially as buying position increases and funds are entering the market.