MARKET UPDATE FOR WEEK ENDED JUNE 2 AND OUTLOOK FOR JUNE 5-9, 2017

The four trading sessions on the Nigerian Stock Exchange over the past week was dynamic in terms of volumes and price movement as the indicators closed higher. This was a continuation of a bullish transition that started in the last week of April, as investors' demand for equities remained high on the heels of the imminent economic recovery and expectation of improved corporate earnings that will influence prices and payout at the end of the year.

In any market situation or cycle, there are key factors or signs associated and help to identify them, which also guide traders and investors in the market to know where the trend is heading. As generally agreed, the price an investor is willing to pay today is based on his/her expectation from the stock in future. The bullish and bearish market is therefore a function of investor sentiments. During a bull market, many investors miss the fact that stocks move on the gap between sentiments based expectations and reality.When investors were deeply pessimistic as it was in the three years of down market, we all were witnesses to the NSE Indicators, as they became mere whipping boys.

Meanwhile, the composite NSE All-Share Index for the week gained 2307.11 points to close at 31,371.63 points, from an opening figure of 29,064.52 points, representing a 7.94% growth on a huge volume of trade to record the highest weekly gain in two years. The growth was significant, when considered against previous week’s level. The index within the short period broke the 2016 resistant level of 31,071.25 and twopsychological lines of 30,000 and 31,000 to new 52-week high of 31,371.63, continuing the bullish rally driven by improving market fundamentals and expectations. The volume index for the period was 1.83 as buying position was 100%, while selling volume was 0%. Similarly, market capitalisation for the period closed higher at N10.85tr from an opening value of N10.05tr, representing a 7.94% appreciation in investors' worth.

The advancers’ log for the period was topped by low priced stocks as investors and traders repositioned their portfolio for second half of the year in expectation of more liquidity, especially against the backdrop of the decion by Morgan Stanley International Capital to increased the weighting assigned to Nigerian stocks from 6.5% previously in its frontier markets basket of equities to 7.5%, a situation expected to point foreign investors to our market. Another driving force is the policy of the CBN to meet foreign exchange demand bringing about stability in the  import and export windows of the forex market remain relatively stable to start attracting foreign inflows to further boost the market.  

Higher equity prices during the week further impacted the NSEASI's year-to-date gain to 16.73%, just as market capitalisation has grown YTD by N1.59tr, representing 16.82% gain from the year’s opening value.

Market breadth for the week remained positive and strong with the number of advancers widening to outpace that of decliners in the ratio of 61:12 on a huge volume of trades that were bullish. This was due to the increasing demand for stocks as market players reposition after end of the month trading account balancing in the midst of profit booking ahead of the March full-year andQ2 earnings reports expectation. 

Stock markets around the world were mixed over the past week, amidst factors such as oil trading below $50 per barrel, weak U.S. labour report that was below analysts and market expectations, coupled with political concerns in the United States and Eurozone with elections lining up.

Germany‘s DAX, Japan’s Nikkei and US market indexes were up for the week, while Britain’s FTSE 100  closed lower. The U.S market indexes over the period closed higher, despite the weak employment report as non-farm payroll came weaker than envisaged; adding some measure of uncertainty to the Federal Reserve’s expected pace of interest rate hikes.

In Europe, stocks were mixed as optimism about the zone’s economic growth has been offset by fears of slowdown and political concerns in the region and U.S.

In Asia, China’s manufacturing sector has come under pressure as the Caixin survey showed a further slowdown. This has sparked concerns that the country’s high debt profile could become difficult to services.

Back home, the Nigerian Stock Exchange’s All-Share Index opened the four-day trading week on a positive note, chalking   0.73%, which was sustained on Wednesday with another gain of 0.76%. The index improved even further on Thursday and Friday when it closed 2.77% and 3.49% better respectively to push the market indicator above its latest resistant level that brought the week’s total gain to 7.94% on strong demand, supported by renewed investor confidence.

The benchmark All-Share index, as well as the sectoral indices for the period closed in the green, except for the NSE Oil/Gas that went the opposite direction when it turned 4.54% in the red, while the AseM was flat to close the week.

Last week’s activity, measured by aggregate volume and value were up by 23.40% and 18.69% respectively as investors traded 2.32bn shares, as against the 1.88bn units in the preceding week. Value for the period stood at N23.81bn from N20.06bn last week.

During the week, the share prices of Chemical & Allied Products (CAP) was adjusted for dividend recommended by its directors, while Greif Nigeria Plc released its Q2 earnings reports.

FBN Holdings and  Uacn Property  topped the week  advancers table  by gaining  31.29% and 25.23% respectively to close at N6.42 and N2.68, driven by low price attraction and general market uptrend, while the flip side was topped by 7UP  and Linkage Assurance , which suffered 14.24% and 12.75% slide to close at N90.04 and N0.55 each respectively.

Market Outlook                   

The market is likely to be mixed this week as a result of profit taking but will still maintain it uptrend as fresh positioning by market players and other investors will keep demand for stock high to push prices higher

With Friday’s trading volume index was 1.80 on 100% buying position, while selling volume was 0%, investors at this level of the market should position in stages in value stocks with high upside potential despite the current prices of stock on the exchange.

Again, the time to combine company fundamental data and chart pattern for your trading and investing  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, register for the comprehensive stock market trading and investing workshop coming up June 24,2017. 

To join our webinar every Friday 8pm to 9pm, WhatsApp group and get market updates, SMS web*name*email to 08124050850

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