Market Update for September 18
The nation’s stock market index had an interesting but mixed session on Monday to start the week as it finally breakdown the psychological line of 35,000 to remain under the rising channel and downtrend line on a low volume traded.
The day started out with a little move up, then pulled back and consolidated until midday, before the afternoon rollover took them down sharply with the benchmark index falling to 34,873.07 after touching an intraday high of 35,105.67 and low of 34,744.96 points, then rallied back in the last hour, before taking back about 95% of the losses. Still, it was a mixed session. As the NSE Banking and NSE Insurance closed in the green while others moved in the same direction as the NSEASI.
As the market waits for the outcome of the Monetary Policy Committee (MPC) meeting today to provide direction as to what other monetary policy initiatives would help sustain the ongoing Central Bank of Nigeria (CBN) intervention in the FX market as part of efforts to stabilise the exchange rate and continue supporting the fragile economic recovery. The decision of the meeting will also pave way for readmission of Nigeria into Morgan Stanley Emerging market Index in November. Since the market is equally expecting the fiscal authorities to do the needful with actions to implement the 2017 budget to ensure it makes impact on the whole system in the few remaining months of the year, while boosting the ongoing economic recovery efforts.
With selling pressure in the market reducing as revealed by the volume index of 0.65, a buying position of 36%, and 64% selling volume of the day’s transaction to sustain the down market.
Meanwhile, the All Share Index shed 132.50 basis points to close at 34,873.07 from the 35,005.57 points opening level which represented a 0.38% decline, just as market capitalisation for the day was down by N46.48bn to close at N12.02tr, from N12.07tr in the previous session, representing a 0.38% value loss to continue the bear transition.
The downturn in the share prices of consumer goods and petroleum stocks impacted negatively to reduce the All-Share Index’s year-to-date returns to 29.76%, just as rise in market capitalisation YTD stood at N2.77tr, representing a 30.01% above the year’s opening value.
Market breadth for the day remained negative as the number of decliners outpaced advancers in the ratio of 18:14 on a low volume traded but higher than the previous day to continue the correction mood in a weak market.
Market activities in terms of volume and value were mixed with volume rising marginally by 1.62% to 162.74m shares, as against the previous day’s 160.12m units, while value was down by 47.95% to N1.54bn from the N2.96bn recorded in the previous session.
Transactions in the shares of Access Bank, Meyer, Fidelity Bank, FBNH and FCMB topped the volume chart.
At the close of the day’s trading session, Newrest ASL topped the advancers’ log with a 4.92% gain to close at N6.82 per share on market forces and earnings expectation; followed by Cadbury with a 4.66% notch at N11.00 per share on market forces.
On the flipside, Neimeth Pharmaceuticals lost 8.57% to close at N0.64 on profit taking, followed by Seplat Petroleum Development Company, which shed 5% to close at N456.76 per unit on profit taking and market sentiment.
Technically, the market is weak and struggling to recover on a high volatility that is likely to continue this morning as trading opens, but still waiting for positive news and return of speculators to the market to breakout the downtrend line, amidst profit booking and repositioning in hope that the positive macro-economic indices. These will drive optimism in equity investments ahead of MPC meeting outcome, Q3 earnings season and year-end. We expect the Nigerian government to review its 2017 budget implementation strategy and put in place some fiscal measures that will help the monetary authorities sustain the ongoing economic recovery as shown by the positive but fragile GDP and August inflation rate to make growth and development a reality.
However, investors need not panic if they take position based on strong numbers and future prospects of any stock as smart investors are using this correction to accumulate and increase their positions in some stocks.
Again, we advise that investors allow numbers to guide their decisions while repositioning for the rest of the year’s trading activities, especially now that prices of stocks are looking down amidst improving economic and market fundamentals. It is time to use your technical tools to take decision by knowing the support and resistant level to reposition or exit any position.