MARKET UPDATE 24

NSE Bull Transition On Improved Investor Sentiments, Static Economy 

The nation’s equity market witness a reversal in the first trading week of the month of August as bulls dominated trades on improved investor sentiments after the market had suffered huge losses in July. This seeming bull transition was short-live as a result of profit taking on the last trading day of the week, no thanks to the lack of economic fundamentals to support the rally.

An injury on the economy, like one on the human body may heal by itself if untreated, but if it does, it sets the economy well below its previous operating capacity and momentum, so it is for any stock market that struggles to recover without economic improvement or direction.

The all expected progressive economic policies to jump-start the economic recovery is not in sight yet, even if we forget that politic cannot be separated from the economy as government needs money to implement policies and deliver the dividends of democracy.

The global market also had a mixed performance, with European and U.S. markets closing low as investors analyse the impact of expected hike in interest rates in the U.S. and how it would influence their portfolios. 

Coming back to the home front, the Composite Index NSE ASI was up by 4.18 per cent from an opening figure of 30,180.27 to close at 31,441.71 a difference of 1,261.44 points. Bringing the negative year to date returns to 9.28 per cent at the end of last week.

NSEASI Day Chart

The market breadth also regained positive momentumwithin the period, as there more advancers than decliners. The huge the trade volume signified accumulation across the broad spectrum of high, medium and low cap stocks.   The index re-entered the 31,000 psychological point andmaintained positive trend.Market capitalisation also added about N430billion in just one week to close at N10.78 trillion from N10.34 trillion recorded during the previous week. 

Consolidating of the market at this point is good, but this would not be for long however, as factors driving the rally are fragile, just as the main factors that are supposed to reverse the four-month decline are still weak. The prevailing economic situation, both technically and fundamentally do not support trading now.

However, the overall environment for equities is improving. Corporate scorecards released so far have been below the market expectation, with some sectors having mixed performance that signals potentials that can still drive equity prices in those sectors.

Market bottoming out at any given time has a process, since it is clear that 50 per cent of market direction move stock price, you want to invest in stocks during a bull market, when the market is in a confirmed up trend.

This confirmation usually occurs when a major index follows through on day four to five or later, after its rally attempt. The first two or three days of a rally are normally disregarded, as the rally has not yet proven it would succeed and follow-through with power and conviction.

Therefore, a follow-through day occurs when at least one of the major indexes makes a big percentage gain of two per cent or more on a big volume than the day before. This means we should watch this week.

Also reviewing of the sector and individual stock chart would offer the best trading opportunities.

On the same northwards trend, all sector indices recorded positive weekly returns, except for NSEASEM that remained unchanged. The NSE Consumer Goods Index led by 5.84 per cent returns for the week.

The transaction level in terms of volume and value of trades improved significantly, moving upwards 99 and 25 percent respectively, relative to last week's trading levels.

In the week under review, total of 2.38 billion shares valued at N18.99 billion were exchanged in a higher number of deals of 19,350 compared to 1.20 billion shares valued at N15.21 billon exchanged in 16,976 deals recorded in the previous trading week.

 Market Outlook

The market's performance last week was just as forecast, that imminent reversal was underway and positive investor sentiments on low share prices triggered buy position that bought about the bull transition.

The CBN's position on stable naira and it's determination to block any avenues for round tripping is expected to encourage foreign investors, but this needs fiscal policy input to make more meaningful impacts.

The oscillating trend of a recovering market is expected this week as profit takers sell off position while others re-position. The market just crossed its 20-Day moving average which is a sign of recovering in the shortest run as it remain in the bearish tertiary.  

STOCKS TO WATCH

Access Bank, Zenith bank, FBNH, Dangote Sugar, Fidson, United Capital, Africa Prudential and Lafarge Africa.

CORPORATE ACTIONS & RELEVANT DATES  FOR LAST WEEK
COMPANY	PERIOD		BONUS		REL.	CLOSURE	PAYMENT	TIME
	ENDED	DECLD	DECLD	REASON	DATE	DATE	DATE
Triple Gee	Mar.31, 2015	N0.04		Final	8/5/2015	9/25/2015	9/19/2015
Union Diagnostic	Jun.30, 2015	N0.2.5		Interim	8/6/2015	8/17/2015	10/2/2015
Northern Nigeria Flour Mills	Mar.31, 2015	N0.30		Final	8/6/2015	8/10/2015	9/14/2015
Cutix	Apr.30, 2015	N0.12		Final	8/5/2015	10/19/2015	11/16/2015
Scoa Nigeria	Dec.31, 2014	N0.03	nil	Final	8/5/2015	8/25/2015	9/24/2015
Flourmills	Mar.31, 2015	N2.10		Final	7/28/2015	8/10/2015	9/14/2015
Courteville Business	Jun.30, 2015	N0.04		Interim	7/28/2015	8/10/2015	8/31/2015
Africa Prudential Registrar	Jun.30, 2015	N0.17		Interim	7/29/2015	Later	Later
Consolidated Hallmark Ins	Jun.30, 2015	N0.02		Interim	7/30/2015	8/10/2015	8/27/2015
custodia& Allied Ins	Jun.30, 2015	N0.06		Interim	7/31/2015	8/17/2015	9/15/2015
AXA Mansard Insuarnce	Jun.30, 2015	N0.03	nil	Interim	7/31/2015	10/14/2015	10/26/2015
Redstar	Mar.31, 2015	N0.35		Final	7/28/2015	8/5/2015	9/14/2015
Honey Well Flourmill	Mar.31, 2015	N0.05		Final	7/28/2015	9/14/2015	9/25/2015