MARKET UPDATE FOR WEEK ENDED MARCH 3 AND OUTLOOK FOR MARCH 6

The Nigerian stock market started the month of March with back to back losses to close last week lower as mixed sentiments hit the earnings reports and negative economic data that were released during the week. The index broke down the strong support level and psychological line of 25,000 before retracing back up to close above 25,000 benchmark. The concern of investors is the increasing risk profile of the nation as2016 GDP contracted by -1.51% and February purchasing managers index (PMI) decline consecutively for two months to 44.0 point in the new year, coupled with increasing unemployment figure as 3.67 million were thrown into the labour market according a report by the National Bureau of Statistics (NBS)for the third quarter of 2016 (the fourth quarter report is being expected). All these negative indices are propelling low confidence which is threatening the nation’s stock market, in addition to US dollar appreciation that has put pressure on emerging markets across the world.   

Meanwhile, the composite NSE All-Share Index shed 238.29 points to close the week at 25,012.08 points, after touching a low of 24,762.07 from 25,250.37 points opening figure,representing a 0.94% decline in the period on improved volume of trades as investors were apparently on a flight for safety. The buying volume of total transactions for the week was 39%, while selling position was 61% to reverse the previous week’s up market.  Similarly, market capitalisation for the period closed lower at N8.66 trillion, from an opening value of N8.74 trillion, representing a 0.94% loss in value, with the market recording mixed performance of two-day up market and three down trading sessions.   

The advancers table for the week was dominated byhigh cap stocks as investorsreacted to earnings reports released, expectations andmarket forces. 

The depreciation of stocks  price during the week especially high cap stocks like Dangote Cement, NB, Guinness, 7-Up and Cadbury  further increased  the NSEASI's year-to-date negative position to 6.93%, also for the same period market capitalisation was  pushed to loss position ofN590.72 billionrepresenting 6.39% decline. 

Market breadth for the week was flat as the number of decliners and advancers were equal in the ratio of 24:24 on a high  volume of trade that support cautious trading and weak market, despite the impressive numbers from Zenith Bank and Dangote Cement. 

Stock markets around the world during the week had  mixed performance to close higher as   crude  prices at the international market remained attractive to traders as the major OPEC member countries agreed on supply already to support the deal reached and sustained crude price. 

The US markets moved largely higher over the week to new all-time high within the period before pulling back on Friday irrespective of the positive earnings season as valuation concern lingered, the second revision to fourth quarter gross domestic product (GDP) showed 0.59%, as increase in consumer spending to a 3% rate, that was offset by a modest drop in non-residential investment. The lobour market strength was support by the lower of jobless claims that revealed strong economy that support fed rate hike in order to reduce free money in the system. 

The Japanese Nikkei, Germany‘s DAX, Britain’s FTSE 100 and other major market indices followed the US markets to close higher for the same period, especially with positive economic data and policies implementation yielding expected results already. 

In Europe, private sector business activities rose at its quickest pace in the last six years, also as the PMI reaching 56.0 in February pointing to improving manufacturing and other businesses in the zone. 

In Asia, China economy is finding direction despite its huge debt profile and trade controversy with the US concerning currency and others. The country is becoming a strong income economy with is a plus for the world’s most populous nation as in trades potentials remain high. Japanese consumer prices edged higher for the first time since 2015 in a positive sign for the Bank of Japan as it continues to move into uncharted territory when it comes to monetary policy. 

Back home, the composite NSE index opened the week on a positive note of 0.43% gain, reversing it on the second trading session, a trend which continued till Thursday when it recorded the highest loss of 1.40%. But it experienced a reversal on the last trading day of the week, gaining 0.73% to reduce the week’s losing streak to 0.94%. 

All the sectoral indices for the period were in the green except for NSE Premium, NSE Industrial that followed the NSEASI to close in the red with 4.47% and 2.33% respective while NSEAsem was flat.

The week’s total transaction levels, measured by aggregate volume was up  81.15% to 1.39 billion shares from 765.66 million shares, value was up by 41.26% to  N13.73 billion from N9.72 billion.  This was in contrast to the closing levels of previous week.  In the week under review also, a total of 1.39 billion shares valued at N13.73 billion were traded in 15,4228 deals, compared with 765.66million shares worth N9.72 billion, exchanged in 12,468 deals in the previous week.

During the week, Zenith Bank, Dangote Cement, Nestle Nigeria and Transcorp released their 2016 full year earnings reports to the market with dividend recommendation except for Transcrop (See the Price and Earnings Tracking for dividend declared), while Cutix and Nigerian Enamelware released their quarterly results.  Also Nestle and Okomu Oil led the advancers’ log with 10.25% and 10.23% respectively, while the flip side was topped by Ucap and Cadbury, which suffered 22.34% and 13.33% decline respectively.

                                              

Market Outlook                   

The market this week is likely to look up as more earnings reports are expected in the market this week and going forward being the peak month for earnings season.

Again, the time to combine technical and fundamental analysis for your trading decisions is now, to enable you know the support and the resistance levels. 

Train yourself and study to know the new approach to adopt at this point and going forward. 

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STOCKS TO WATCH

Total, Fcmb, Presco, Zenith Bank, UBA, and Aiico