EXPECT MIXED ACTION, AS POSITIVE ECONOMIC DATA SUSTAINS BULL-RUN

MARKET UPDATE FOR JUNE 15, 2017

Nigeria’s stock market had a very interesting session on Thursday as intraday volatility continued on a mixed investor sentiment as profit taking and repositioning in some value stocks that experienced pull back persisted.

The day started out with a big gap up to test a new high of 33,983.89 and low of 33,494.29 before closing higher for the day on a high volume with index of 1.13 on a buying position of 62%, while selling volume was 38% of total transactions for the day.

It was a day the National Bureau of Statistics (NBS) published a better than expected Consumer Price Index of 16.25% for the month of May during the trading session, as against the previous month’s 17.24% inflation rate. This has further confirmed the economic recovery and impact of the Central Bank of Nigeria (CBN) intervention that had reduce the high rate of imported inflation as Naira sustain its relative appreciation against major currencies of the world.

The stock market being a leading indicator and at the same time that can be priced into future expectations to current trend reveals fundamentals of the economy, markets, industries, sectors and companies, which are improving. This has confirmed the efforts of government and its economic managers to put the economy in a growth path again, especially with the commencement of 2017 budget implementation despite the delayed assent and infrastructural development. There is also the proposed tax holiday for some companies that will further boost top and bottom line of many companies that will support their prices going forward.

Stock markets around the world were mixed to close lower as investors are interpreting the impact of the Fed’s continued hike of rate, while it remained unchanged in London as the Bank of England leaves rate at 0.25%. At the same time, the Eurozone finance ministers are meeting to discuss Greece debt, coupled with unstable price of oil in the international market. 

Meanwhile, at the close of Thursday’s trading activities, the benchmark index gained 199.64 basis points to close at 33,797.84, after opening at 33,598.20 points, representing a 0.60% growth on a high volume traded. It was however lower when compared to previous day’s transaction level. Similarly, market capitalisation for the day was up by N69.04bn to close at N11.69tr, from an opening value of N11.62tr, representing 0.6% appreciation in value.

The upturn in the share prices of medium and high cap stocks impacted positively on the All-Share index’s year-to-date return to 25.76%. Also, growth in market capitalisation for the same period stood at N2.44tr, representing a 26.39% appreciation above the year’s opening value.

Market breadth for the day remained positive as the number of advancers outweighed decliners in the ratio of 33:24 on high volume of trade to continue the two-day bull transition.

Market activities in terms of volume and value were mixed as traded volume was down by 24.43% to 573.6m shares from previous day’s 759.05m shares, while value was up by 24.6% to N7.85bn from the previous day’s N6.3bn. Transactions in the shares of ACCESS BANK, ZENITH BANK, FBNH, GURANTY TRUST BANK and UBA topped the volume chart to close the day’s trade.

At the end of trading, May & Baker still topped advancers’ log with its share price gaining 9.79% to close at N4.15 each, on continue impact of the Memorandum of Understanding (MoU) with the government to produce vaccine. It was followed by Skye Bank’s 9.52% gain to close at N0.69 per share, on market forces.

On the flipside, Champion Brewery led the decliners’ log, after dropping 4.89% to close at N3.11 on profit taking, while Honeywell Flourmill followed with 4.85% to close at N2.16 each on profit taking.

TODAY’S OUTLOOK

As the market opens this morning, being the last trading day of the week, expect mixed action of profit taking which may follow through the three day-volatility, amidst repositioning in value stocks.Investors should not panic on the recurrent pullbacks if they have taken 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 activities, especially now that prices of stocks are looking up ahead of recovery economic fundamentals, if the numbers will support the price reversal or continuation.

It is 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 recovering. For stocks that should be on your shopping list to buy in this up market or pullback sign up for investdata buy & sell signal setup by calling 08032055467.

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Workshop on COMPREHENSIVE SHORT-TERM TRADING STRATGIES FOR REST OF THE YEAR & BEYOND

Sub Topics:

1. The Toolbox of Successful Traders & Technical Analysts- Mr Meshach Ukpoma, FX Analyst/Trader

2. Outlook and Implications of the 2017 Budget & Petroleum Industry Governance Bill (PIGB) on Nigeria’s Stock Market and Economy- AbiolaRasaq, Group Head Investor Relations, UBA

3. A Strategic Outlook; The Fusion of Fundamental & Technical Analysis- Ambrose Omordion, Chief Research Officer Investdata Consulting Ltd

4. Understanding Market Timing to Manage Risk, Using Technical Analysis - Mr. Abdul-Rasheed  Momoh, Head, Capital Markets, TRW Stockbrokers Limited

The workshop holds on:

DATE: 24 June 2017

TIME: 9.00am

VENUE: Ostra Hall & Hotel, Behind MKO Abiola Gardens, Opposite NNPC Gas Plant, CBD, Alausa, Ikeja. Lagos.

The fee is N20, 000 per participant. Payment made a week before the date of the event attracts 10% discount. Companies sending more than two representatives would enjoy a 15% discount.  Payment should be made into: Zenith Bank; Account Name: InvestData Consulting Limited; Account Number: 1013033032.

For more enquiries about the programme, please call 08032055467, 08179547605, and 08111811223  

MR. OMORDION AMBROSE

CHIEF RESEARCH OFFICER

INVESTDATA CONSULTING LIMITED

ambroseconsultants@yahoo.com

TEL:01-4724645, 08028164085