MARKET UPDATE FOR APRIL 19

MARKET BREADTH REMAINS WEAK, DESPITE MID-WEEK’S POSITIVE CLOSE

The Nigerian stock market’s indices continued its high volatility at the mid-week’s trading session to close positive and reverse the previous day’s down market as first quarter reports released so far remain mixed.Figures from Forte Oil and Unilever in particular seem impressive enough to rekindle demand for stocks, while United Capital’s numbers for the same period were flat and below market expectations thereby affecting short-term position taking in the stock as pullback is evident.

There is increasing activities of smart money and other investors as Q1 numbers trickle to the market ahead of the April 30 deadline for submission of quarterly reports ended  march 31 2017.  The volume index stood at 0.94, while buying position was 100% and selling volume, 0% of the day’s total volume traded, which reveals investors’ positive sentiments to company earnings.

The oil price in the international market pulled back as US bloated oil supplies weighed down on the markets, while a fall in Saudi crude exports was offset by rising production. Regardless of the seeming recovery of the dollar after hitting three weeks low, geopolitical concerns about North Korea and fear ahead of French presidential election lent support to the safe haven investment windows especially as prices of gold drop. These have made major markets of the world to close lower. 

Meanwhile, the composite NSE All Share Index gained 124.70 basis points to close at 25,331.77 from an opening figure of 25,207.07, representing a growth of 0.49% on above the average volume traded, but lower when compared to the previous day’s volume.

Similarly, market capitalization for the day was up by N43.15bnto close at N8.81tr, from an opening value of N8.77tr, which represented 0.49% growth in investors’ portfolios.      

Appreciation recorded in the shares of   Zenith Bank, Guaranty Trust Bank, Access Bank, FBNH, Nestle and PZ impacted the All Share index to reduce year-to-date negative position to 5.74%, while market capitalization adjusted to N481.83bn, representing a 5.21% loss YTD, from the year’s opening value.

Market breadth for the day was positive but weak as the number of advancers outpaced decliners in the ratio of 15:13 to halt previous-day’s trading session of bear market. 

Market activity in volume and value were up by 110.8% and 24.9% respectively to 322mshares from previous day’s 152m shares, worth N1.53bn from previous day’s N1.22bn. The volume of transaction was driven by shares of Law Union Insurance, Diamond Bank, Zenith Bank, Transcorp and FBN Holdings as most traded equities.

The NSE All-Share index and all sectoral indices were up, except for the NSE Insurance index that closed 0.41%lower.

Infinity Trust notified the exchange of its closed period for the expected first quarter earnings report and its 3k dividend.

United Capital made available its first quarter earnings report to the market with flat earnings of 20 kobo per share, as against previous first quarter’s 19 kobo.

At the end of the day’s trading, Transcorp led the advancers log with 8.54% to close at N0.89 per share, driven by market forces and low price attraction; followed by FBN Holdings with 7.74% to close at N3.62, on 2016 and Q1 2017 earnings expectations while Honeywell Flour Mills topped the decliners’ log, shedding 9.26% of its opening value to close at N0.92, market forces, next was Okomu Oil, dropped 5.01% to close at N49.88 on profit taking.

As market opens this morning, we advise that investors allow numbers to guide their decisions to re-position for Q2 trading as the first quarter earnings reporting season is ongoing. Industry potential is very important when picking a particular company, because there are things that are sector-wide and would naturally impact positively or negatively on companies operating within such an industry.

NSEASI DAILY TIME FRAME

The index on a daily time frame has formed falling channel since December but with the recent up trend in March it has formed a symmetric triangle with triple bottoms that support continuation trend if yesterday’s rebound is sustained today as the market opens, since it was a strong volume and positive sentiments as revealed by the sell/buy volume index. The momentum strength and direction is weak as ADX is below 20 at 13.59 with +D1 18.03 and –D1 28.78.

The index candlestick formation pattern as at close of trade support up market especially with the increasing volume traded, but depends on market forces and strength of numbers expected to hit the market during trading session. MFI is looking down, indicating that funds are exiting the market, MACD just crossed below its signal line to become bearish as at close of trade yesterday. RSI is reading 46.84 relatively strong. 

Investors should note that today is markdown date for NASCON ALLIED INDUSTRY for the 70kobo dividend per share which the company and the registrar did not communicate its qualification date to guide investors. Instead, they only provided closure of date for April 20, while AGM has been scheduled for May, 4 2017 and Payment date- May 8, 2017. For transparency purpose and full disclosure, authorities should look at this, as the registrar wants to deny investors that bought the shares on April 19, 2017 of an opportunity to partake of the dividend proposed.