MARKET UPDATE FOR THE WEEK ENDED MAY 12 AND OUTLOOK FOR MAY 15-20
NIGERIAN STOCKS
PULLBACK ON PROFIT BOOKING AFTER 11- DAY RALLY
Nigeria’s equity market indices for the second week of May closed
higher to continue the bull transition that slowed down on Friday, as many
traders took profit from the recent 11-day rally. This signals the beginning of market correction,
especially with the outrageous volume traded on Friday, which further shows that the
party is over for now until a time when external and internal market forces pool
resources to drive prices again.
Last Thursday’s passage of the 2017 Appropriation Bill by the National
Assembly, which many had expected to have immediate positive influence on the
market did not,even amidst the thinking that this had been factored into the
scenario, while stakeholders hope to see the real impact when full
implementation kicks off after the Presidential assent to the bill. Only then
will disbursement of funds, especially those for various capital projects to
the contractors and others to boost business activities and productivity.
The expected stock market pullback is normal in any environment, especially
after a rally like we have just experienced,creating room for repositioning
again, which supports the old mantra of the stock market: "Buy low and
sell high.”
The good thing in the market today is that companies and market
fundamentals are improving at a time the nation’s economy is recovering from
recession and many listed equities are still selling at a discount of their
intrinsic value.
The rekindled confidence of Investorsand improving liquidity in the FX
market are factors in the market that suggest this correction may not take too long
before a rebound, meaning that investors in any position that is now on the
down trend should wait.
Meanwhile, the composite NSE All-Share Index for the week gained 1,956.83
points to close at the week at 28,192.46 points, from an opening figure of
26.235.63 points, representing a 7.46% growth on a very high volume of trade.
The growth was significant, when considered against previous week’s level to
continue the two-week of bull market. The volume index for the period was 2.12
as buying position was 75%, while selling was 25%. Similarly, market capitalisation for the period
closed higher at N9.75tr, from an opening value of N9.07tr, representing a
7.46% appreciation in investor’s portfolio.
Advancers table for the period wasa mix of low, medium and high cap stocks
that top the log as investors and traders repositioned their portfolio along
the line of value and sectors, with better economic data to support the
recoverybeing expected.
Price
rally during the week returned the NSEASI's year-to-date to a positive position of
4.90%, just as market capitalisation grew YTD by N517.21bn,
representing 5.35% gain from the year’s opening value.
Market
breadth for the week was still positive and strong but widened as the number of advancers
outnumbered decliners in the ratio of 57:13 on a big high volume of trades that
were bullish, due for increase in demand for stocks as smart money markup price
to dump on late buyers. With the recovery in the economy and expected improved data
signaling good time for the stock market if numbers emanating from companies continue
to look up in subsequent quarters.
International
stock markets were mixed over the past week, despite the seeming rebound of oil
prices amidst cautious trading by investors, blamed on the lackluster earnings
reports from high cap companies and the weak US Dollar which triggered commodity
trading during the week, touching oil prices.
Japan’s
Nikkei, Germany‘s DAX and Britain’s FTSE 100 were up for the week, while US
market indexes were lower in a relatively quiet period of trading, despite the
positive consumer confidence figure in May that beat expectations to a robust
97.7, as retail sale growth fell short of market expectations.
In
Europe, the Eurozone economy posted faster growth rates than that of the U.S during
the first quarter at a 0.5% quarterly rate as against the 1.8% annualized rate
for 2017. In Asia, Japan is expected to post its fifth straight quarter of
growth as consumer spending and offshore growth continue to improve according to
a Reuter’s poll of economists.
Back
home, the All share index opened the week on a positive note, gaining 0.70%,
which was sustained on Tuesday,
Wednesday and Thursday with 1.28%, 2.955 and 3.18% respectively to
pullback on the last trading session of
the week with 0.81% loss, which resulting in the cumulative gain of 7.46% for the week on strong demand supported
by renewed investors’ confidence and
improving liquidity in the fx market that is likely to attract foreign inflow.
The
composite All-Share index and all sectoral indices for the period closed higher,
except for NSE AseM that was flat.
The
week’s activities, measured by aggregate volume and value were significantly up
by 183.47% and 175.29% respectively to 3.25bn shares from 1.15bn units in the
preceding week. Value for the period stood at N28.74bn from N10.44 billion last
week.
During the week, the share prices of AIICO Insurane, Medview Airlines, Nestle
Nigeria and FBN Holdings were adjusted for dividend recommended by their directors. Smart Product, Tourist Company and FTN Cocoa Processor released
their quarterly earnings reports.
May & Baker and ETI led the advancers’ log for last week, gaining 31.90% and 22.50% respectively to close at
N1.28 and N9.80, driven by low price attraction and market forces, while the
flip side was topped by Jaiz Bank and Seplat, which suffered 9.09% and 5.88%
slide to close at N1.00 and N400.00 each respectively.
Market Outlook
The market this week is likely to be mixed as short term profit taking
continues in the absence of external forces to push price in form of earnings
this period, exceptwhere there is foreign inflow, with inflation figures scheduled
for release by the National Bureau of Statistics (NBS) before the market opens
this morning, which is likely to show a Month-on-Monthdrop in rate after months
of slowdown in growth. With Friday’s trading volume index was 3.37 on 0 buying
position,while selling volume was 100%, investors should hold cash to watch the
trend this week,
Again, the time to combine data and chart pattern
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, get your comprehensive short
term trading pack.
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