MARKET UPDATE FOR MAY 16, 2017

MARKET FORCES FIGHT FOR CONTROL AS INVESTORS REPOSITION, TAKE PROFIT

It was a mini volatile session during Tuesday’s trading on the Nigerian Stock Exchange as the benchmark index opened sharply low in the early hours, but rose sharply by mid-day to close higher.
Discerning investors saw mouth-watering intrinsic value in the share price of companies adjusted for dividend, which subsequently regained the amount deducted from their prices. Investors particularly rekindled interest in consumer goods and banking stocks,despite the ongoing profit taking mode to reverse the two day down trend. Both sectors are generally considered by the investing public as guiding indicators in assessing economic activities and conditions.

Also positive news that Inflation figures slowed down marginally for the third consecutive month to 17.24%in April as released by the National Bureau of Statistics on Tuesday before market close, helped to boost the rebound. The NBS data showed that Consumer Price Index or inflation growth rate for April 2017 rose by 0.02% points to 17.24% compared to 17.26% recorded in March.

The concerns for many investors now, is that government should expedite action on faithful implementation of the already delayed budget by signing it into law, except there is any compelling reason to go otherwise,thereby allowing the economic managers swing into action. This would go a long way to support the economic recovery efforts that have so far been driven by the Central Bank of Nigeria (CBN) in the form of structural reforms and   fiscal stimulus-driven growth that will move the economy out of recession in no distant time. At this point everyone stakeholder must commit to making the Federal Government’s Economic Recovery and Growth Plan (ERGP) work to deliver the set goals.

Meanwhile, the NSE’s composite All-Share index gained 95.98 basis points to close Tuesday’s trading session at 27,609.67 points, from an opening figure of 27,513.69 points, which represented 0.35% growth on a high volume traded, but still lower when compared to previous day’s volume of transactions. Volume index for the day was 1.17 with buying position of 98% and selling volume of just 2% of the total transactions as at close of Tuesday trading.

Similarly, marketcapitalisation for the day went recovered N33.18bn to close at N9.54tr from an opening value of N9.51tr, representing also 0.35% gain in investor’s positions.

Price upturn recorded in the shares of Nestle, Flourmills, NB, Guinness, Okomu Oil Palm, Access Bank, Zenith Bank, Guaranty Trust Bank and FBNH that pushed the All-Share index, reducing year-to-date position to 2.73%, while market capitalization for same period stood at N297.15bn, representing 3.20% above the year’s opening value.

Market breadth for the day turned positive as the number of advancers outweighed decliners in the ratio of 23:16 on a high volume of trade to halt the two day bear transition. 

Market activities are still trending down as volume and value were down by 15.17% and 15.54% respectively to 569.18mshares, from previous day’s 678.77mshares, while value fell to N6.68bn, from the previous day’s N7.91bn.

Transactions in the shares of ACCESS BANK, UBA, FBNH, GURANTY TRUST BANK and OANDO topped the activity chart as most traded equities by volume

The NSE All-Share index and all sectoral indices were in the north direction, except the NSE Insurance and NSE Oil/Gas thatclosed southward to end the day’s trading.

During the day’s session, the share price of conglomerate- UACN and agro-allied giant Okomu Oil were adjusted for a dividend of 100 kobo and150 kobo respectively as recommended by its directors. At the end of the day, International Brewery  topped the advancers’ table, with its share price notching 5.00% to close at N21 purely on the interplay of market forces and full year earnings report expectation; followed by Custodian Allied Insurance  with 4.89% to close at N3.43per share on market forces

On the flipside, Seplat led the decliners’ table, shedding 9.00% to close at N345.80 on profit taking; followed by Newrest ASL, which dropped 8.95% to close at N4.07on market forces. 

As market opens this morning, expect mixed action of profit taking and repositioning in value stocks to continue. 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 pulling back, if the numbers will support the price reversal. Time to use your technical tools to take decision by knowing the support and resistant level to reposition 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 especially now that the economy is recovery.

Technically, Technical Indicators are mixed as at close of trading yesterday, which suggest traders and investors should trade with caution.

NSEASI DAILY TIME FRAME

NSE Index daily trending ability is still strong above ADX 20 at 30.53, while RSI is still at its overbought region that support further correction at the same time money flow index is looking down indicating that funds are still leaving the market.