MARKET UPDATE FOR MAY 2, 2017
Trading on the floor of the Nigerian
Stock Exchange started the month of May on a positive note after Monday’s holiday
to mark Workers’ Day,as investors react to impressive quarterly results hitting
the market which together inspire hope that this year would perhaps be better.
The impressive numbers have spiked high
demand for stocks as investors and traders react to the numbers, most of which
came way beyond market expectation, especially those of banking stocks that
have remained consistent in making available impressive reports even at the
heat of the recession. This has made the sector the toast of investors as the
recent numbers signal higher reward for investors if the trend is sustained to
year-end.
As the investing community interpret and
digest these earnings reports, expect high volatility in the market as they
sell their positions in some, to reposition in others with high expectations on
the strength of first quarter results and the prospects in each industry as the
economy remains on the path of recovery.
The latest April PMI figure of 58.9
points shows that the manufacturing sector in Nigeria is back on track as it
expands at its fastest pace since 2013. This can be attributed to the new
Central Bank of Nigeria (CBN) reform policy on foreign exchange, with focus on
supply side of the FX market. It has consequently continued to provide liquidity
through its intervention to various segments of the market, including Bureau De
Change, the new SME window, as well as the regular Wholesale spot window. These
have seen the naira appreciate again other currency, while at the same time considerably
closing the gap between the back market and inter-bank rates. This recovery as revealed by latest economic
data will be faster, if the 2017 budget that has remained stuck once more on
the shelves of both chambers of the National Assembly is passed and signed into
law by President Muhammadu Buhari, with each party bearing in mind that the
economic needs to get back on its feet in a matter of days. The executive and
legislative arms of government must also realize that there is need to kick-start
the full implementation of the administration’s Economic Recovery and Growth
Plan (ERGP), to complement the ongoing intervention by the CBN to help it impact
more positively on the economy to accelerate recovery and usher the nation onto
a season of growth. Many have expressed concerns over the non-passage of the
budget, despite repeated assurances by the legislators, leading to fears that
perhaps the budget may have become jinxed just like the Petroleum Industry Bill
(PIB), which is almost as old as this fourth republic
The nation’s stock market at the end of
Tuesday’s trading joined other markets of the world to close higher as positive
corporate earnings especially the international companies supported US market
indexes, just as the Euro zone’s manufacturing expansion moved at its fastest
pace since 2011, a situation that boosted investor confidence in the zone.
Meanwhile,
the composite Nigerian Stock Exchange (NSE) All-Share index gained 206.62 basis
points to close Tuesday at 25,965.18
points, from an opening figure of 25,758.51 points, representing a 0.80% growth
on a low volume traded, when compared to previous day’s volume. Similarly, market capitalisation for the day was up by N62bn, closing at
N8.97tr from an opening value of N8.91tr, representing a 0.70% average value
appreciation in investor’s portfolios. The
buying volume of total transactions for the day was 95%, while selling position
was 5% to continue three days up market as volume index for the period was
0.76.
Value gained by highly capitalized stocks
impacted the All Share index to reduce year- to-date negative position to
3.38%, while market capitalisation adjusted down by N272.03 billion,
representing 2.94% loss YTD, from the year’s opening value.
Market breadth for the day was positive
and strong as the number of advancers outnumbered decliners in the ratio of
23:12 to continue it three days bull transition.
Market activity in volume and value were
down by 47.87% and 25.95% respectively to 191.02 million shares from previous
day’s 366m shares, valued N2.13bnfrom previous day’s N1.87bn.
The NSE All-Share index and all sectoral
indices were in the green except the NSE AseM that was flat, closing the day’s
trading activity.
During the day’s trading, six companies
released their quarterly earnings reports, including Eterna, Custodian Allied
Insurance, Regency Alliance, Portland Paints, Law Union Insurance, as well as May
& Baker.
At the end of the day, NPF Micro finance
topped the advancers table, as its share price gained 9.09% to close at N1.44,
on impressive Q1 earnings report and dividend of 15 kobo proposed; followed by
Fidson Healthcare with 9.09% to close at N1.20 on the back of the interplay of
market forces. On the flipside, UACN led the decliners log with 4.98% to close
at N13.75 purely on market forces; while JaizBank was next with 4.35% to close
at N1.10 also on market forces.
As market opens this morning, we advise
that investors allow numbers to guide their decisions to reposition for the
rest of the year’s trading especially now that first quarter earnings reports
are out to give insight what should be expected at the year end.
Industry potential is very important when
picking a particular company, because there are factors that are sector-wide
and would naturally impact positively or negatively on companies operating
within such an industry.
Technically, the market recently breakout
it resistant yesterday on a low volume that supported market breadth on the
strength of positive Q1 financials. Meanwhile, trending ability and direction
is still weak as ADX is below 20 at 13.74 while MFI is looking up to indicate
money is entering the market as at close of trade. MACD is still bullish while RSI is reading
60.55 as at yesterday but combine technical with fundamental to position at any
given time.
NSEASI ON DAILY TIME FRAME
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