MARKET UPDATE FOR MAY 11, 2017

NSE INDEX SOARS TO 6.16%, NOW AMONG AFRICA’S BEST ON ROI

The bull rampage on the floor of the Nigeria stock Exchange continued on Thursday as stock prices moved higher again on increased demand with the number of retail, institutional and foreign investors participating in the market increased due to efforts by the Central Bank of Nigeria (CBN) to sustain the supply-side of the FX market that has improved liquidity. 

The day started out with a big gap up, the indexes increased sharply with double top near the session highs around the early hours of trading before profit taking in some stocks slowed down the day gain.The seemingly rekindled confidence and improved liquidity in the market arena are expected to support the recovery as foreign investors participation is looking up. 

The 2017 Appropriation Bill tagged“budget of recovery” was passed into law on Thursday waiting for Presidential assent and expected to make the most impact on the lives of Nigerians if implemented properly. 

The composite All-Share index recorded its highest gain in a single day again so far this year with  877.02 basis points to close Thursday’s trading session at 28,423.70 points, from an opening figure of 27,546.68 points, which  represented a 3.18% growth on a very huge volume traded, which was higher when compared to previous day’s growth rate. In the same direction, market capitalisation for the day went up significantly by N303.17bn to N9.83bn from an opening value of N9.52tr, representing also a 3.18% value gained by investors. 

Meanwhile, price appreciation recorded by medium and high cap stocks further impacted the All-Share index positively to bring  year-to-date position to 5.76% to be among the best performing market in Africa, while market capitalisation for same period improved to N578.44bn, representing 6.16% above the year’s opening value.

Market breadth for the day remained positive and strong but reduced, compared to the previous day’s the number of advancers outpaced decliners in the ratio of 44:13 on a very high volume of trade that signals that the end of the rally is near.

Market activities in volume and value were up by 37.14% and 38.41% respectively to 801.08m, shares, up from previous day’s 584.12m shares, while value went up to N7.82bn, double previous day’s N5.65bn. 

Transactions in the shares of FCMB, FBNH, FIDELITY BANK, UBA and TRANSCORP topped the activity chart as most traded equities by volume.

The NSE All-Share index and all sectoral indices closed higher, except the NSE Oil/Gas that dropped by 2.28% while NSE Asem was flat to the close the day’s trading.

At the end of the day, Forte Oil topped the advancers’ log, with its share price rising by 10.23% to close at N50.41 on the activities of market forces; followed by ETI with 10.06% to close at N9.41 per share on market force and bullish sentiments. 

On the flipside, Seplat led the decliners’ log, losing 9.75% to close at N383.57 purely on market forces; followed by BOC Gases, which dropped 4.83% to close at N3.35 on market forces.

As market opens this morning, expect mixed performance as profit booking is underway. That means investors should not panic if they take position based on strong numbers and future prospects of any stock. 

Again, we advise that investors allow numbers to guide their decisions to reposition for the rest of the year’s trading, especially now that prices of stocks are flying, if the numbers will support the price going forward. Time to use your technical tools to take decision to hold or exit any position. 

Once more at the risk of repeating oneself, we must reiterate that industry potential is very important when picking a stock, because there are factors that are sector-specific and would naturally impact positively or negatively on companies operating within such an industry.

Technically, the market’s uptrend continued yesterday on a very high volume that supported positive market breadth that reduce despite the high stock prices for the day. Market sentiments remain positive but profit taking has started as reflected in the volume index.

Nonetheless, the NSE’s trending ability and direction is strong as ADX is above 20, reading 28.23; while MFI is looking up to indicate money is entering the market as at close of trading.

MACD is still bullish, while RSI is reading 84.43 which in at the overbought region to close the day’s trade. The candlestick formation pattern at the upper band of Bollinger signals imminent reversal of the market trend, as traders started cashing out profit.  Be careful when taking position at this point unless in value stocks with medium and long term perspective. As smart money makes last minutes effort to move price higher in this recovery phase of the market, investors should take stage profit before the party is over at level.