As at May 2020, the NSE revealed that domestic or local investors’ participation in the market has increased to 70.42% while that of the foreign counterpart has decreased to 35.24%, suggesting that the market current stance is determined largely by the local investors.
This is coming more as good news than a bad one. If the status quo ante had been maintained, the preparation of the FPIs to exit the market, nay the country would have subjected the market to a serious adverse after effect of their flight for safety. Prices would have been really depressed more than what we are seeing in the market currently.
Heretofore, high cap stocks trading above N100 have board lots of 10,000 units while mid cap stocks trading between N5 and N99.00 have board lots of 50,000 units. Low cap stocks trading from N0.20 to N4.99 have board lots of 100,000 units but at the wake of the expected turbulence in the market, the NSE reversed the board lots for the respective classes of equities making it a flat 100,000 units across boards.
This also came in the disguise of an Angel; the market would have witnessed more depressed sessions than what we are currently experiencing but for that regulatory change. It takes real financial muscles to either buy or sell 100,000 units of Seplat, Dangcem, MTN and Nestle every day on the floor of the exchange.
Little wonder that this week’s weekly change was just 1 basis point, which is a pointer to a broody mood market, waiting for a stimulus to trigger a direction.
At this juncture, it will be advised that investors keep their focus on stocks with strong fundamentals as any information; negative or positive shall soon be at the market arena to change the course of the market.
This stock after climaxing at N2.82, though the machine was able to capture N2.57, slowed down to N1.14 on Wednesday, it should be noted that the stock was part of our discourse last week.
Now the market is thinking that the price has lost so much (55.6%) which has qualified it to look cheap. Momentum has entered back into the stock driving it from N1.14 on Wednesday to N1.37 at the close of business on Friday; can it repeat the feat of going back to N2.82 or N2.57? only the market can tell.
Most stocks on the gainers and the losers chart for the week were largely due to market interplay save for Dangote Sugar, Japaul Oil, Glaxo and Prestige Assurance.
Dangote Sugar, Glaxosmith and Prestige Assurance were marked down for dividends and bonus respectively. The former was marked down for a dividend of N1.10 while Glaxosmith was marked down for a dividend of N0.55.
The latter was marked down for a bonus of 2 for 11. The market then discounted this information into their prices and it is not looking in their directions presently, hence they lost during the week by the same quantum of the mark down.
Remember that Japaul Oil has notified the market of a possible capital market activity, in consonance with the idiosyncrasy of the market, that information was factored positively into its price and I saw the market driving the price up to N0.27. How long and how far can this be sustained at the backdrop of the information at the market place as regards the stock, the market will confirm in the coming days.
The market will continue to witness mix weekly performances as prices continue to trade within their current axes while investors are juxtaposing their risks with their anticipated returns that will create a ricocheting effect in the short and the midterm.