Starting off the new week, equities trading on the floor of The Nigerian Stock Exchange maintained bearish side, as the lead performance pointer- NSEASI gave up 12Bpts of its trading points and closed at 40,425.07 from 40,472.45. It was a mixed performance amongst the observed market indices as shown in the index movement table. By this negative performance, total point lost within the month of May is now 204Bpts. See the index movement table for details.
Value loss by the market capitalization of the listed equities during today’s trading activities was N17.10 billion, same as 12Bpts below the opening value. Meanwhile, trading activities for the day produced 26 advancers and 22 lagers. NSEASI Year to Date gain is now 5.71% while the Market Capitalization Year to Date gain stood at N1.033 trillion same as 7.60% above the year’s opening value.
For the first time in over a month, the market long standing support has been challenged, as today’s closing point stood closely below the line. Techically, this is a strong bearish warning. It is a confirmation of the presence of a very strong negative fundamental. In our opinion, traders seems to be giving up as the said fundamental factor
Complimenting the previously released Headline Inflation figure, the National Assembly eventually passed the 2018 budget as promised today. From the passed budget, the Federal Government will spend N2.2tn to service debts, with N1.75tn to be spent on domestic debts, and N254.07bn on foreign debt service, while the sum of N190bn is appropriated as “sinking fund for retiring maturing debs.” In 2017, debt servicing gulped N2.014tn.
The crude oil benchmark price for the budget also changed from $45 proposed by the Executive to $51. The additional N508bn to the budget size was reflected in the sectoral allocations to government’s Ministries, Departments and Agencies.
In our opinion this should further impact market fundamental positively and increased investors’ confidence. Nevertheless, we are not taking lightly the investors’ fear of possible impact of the upcoming national election on the market trend. We believe this is far stronger than all economic indicators put together. Despite this fact, we recommend that investors should position for the second quarter financials. Equities with half year incentive policies should be considered. Safe Trade.