NSE IN A MIXED DIRECTION AS MONTH END PROFIT TAKING CONTINUE

MARKET UPDATE FOR MAY 30, 2017

The Nigerian equity market indices had a very choppy Tuesday and ended the session mixed, after starting out with a surge to the upside, attaining a midday high of 29,512.26. A real sharp pullback ensued thereafter, as a result of massive profit taking in banking stocks that slowed down the index from a gain of 1.52%, closing the day at a 0.73% on a high volume index of 2.20. Buying position was 48%, while selling volume was 52% of the total transaction for the day.

Just as we have mentioned in our outlook for the week, the market is at a crossroad, expecting to breakout of the imminent resistant level which it attained, but could not sustain before trading activities closed for the day to pullback on selling pressure for end of the month trading balancing by the market players.  

The slowdown in the intra-day movement and in the recovery market should not cause panic among investors for now, as factors propelling the market are still intact. Particularly, the Central Bank of Nigeria (CBN) continues to provide liquidity in the forex market, while the nation's economic data are looking positive, while we expect a more positive news, going forward, especially if the 2017 budget implementation kicks off any time in second half or before the end of half year. As we have always said, a favorable and improved operating environment would help to drive businesses and equity prices at different times, buoyed by the impact of better corporate earnings that beat market expectation.

We expect Nigeria's operating environment to improve going forward, helped by Tuesday's signing into law by Acting President Yemi Osinbajo of two laws passed by the National Assembly to ease business activities. Particularly' there is the one that allows movable assets by proprietors of Micro, Small and Medium scale Enterprises (MSME), such as vehicles to be considered as collateral enough for assessing bank credits. The other is the Collateral Registry Act that makes it mandatory for banks to share information on their creditors, which is expected to check the activities of serial debtors that are now a threat to the nation's financial system.

In addition, the recent upward adjustment in the percentage of pension funds under administration that can be invested in equities to 30% is expected to further boost market liquidity and push the prices of those stock that meet investment their set selection requirements.

Stock markets around the world were mixed as traders and investors shifted their attention to political events happening in Europe and elsewhere, such as concerns over Greek bailout ahead of sentiments around Italy's next election, which is weighing down the market, just as Germany and UK elections are also along the line. The price decline in oil is expected, but will continue, before rebounding as major oil traders and fund managers believe the decision to extend production cut by the Organisation of Petroleum Exporting Countries (OPEC)is in order.

Meanwhile, the NSE’s composite All-Share index gained 212.07 basis points to close at 29.276.59, after opening from 29,064.52 points, representing a 0.73% growth on a high volume, which is above average traded volume of the market. It was higher, when compared to previous day’s volume of transaction. Similarly market capitalisation went up by N73.33bn to close at N10.12tr, from an opening value of N10.05tr, representing a 0.73% gain in investors’ portfolios.

The uptrend in prices of high cap stocks during the day impacted the All-Share index positively, further boosting year-to-date return to 8.94%, while market capitalisation for same period stood at N874.16bn, representing 9.45% above the year’s opening value.

Market breadth for the day was positive as the number of advancers outnumbered  decliners in the ratio of 29:17 on high volume of trade to continue the up market 

Market activities for the day in terms of volume and value were up by 14.74% and 32.69% respectively to 832.52 million shares from previous day’s 725.54 million shares and N7.59bn from previous day’s N5.72bn.

The All-Share index and all sectoral indices were in green at the close of the day’s trading, except for NSE Oil/Gas that were in the red, while the NSE Asem closed flat.

At the end of the day trading session, AXA Mansard  topped the advancers’ table with its share price gaining 9.47% to close at N2.08 per share, purely on market forces and expectations from its investment in hospital that is likely to boost top and bottom line going forward. It was followed by FBNH with 7.98% gain to close at N5.25 per share also on the backdrop of the forces of demand and supply.

On the flipside, Seplat led the decliners’ table, dropping 5.00% to close at N370.00 also on the interplay of demand and supply; 7-Up followed with a 4.99% to close at N99.75 each on profit booking.

As market opens this morning, expect mixed action of profit taking and repositioning in value stocks to continue, which 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 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.Invest wisely and sign up for investdata buy & sell signal setup.

NSEASI DAILY TIME FRAME

INVESTDATA CONSULTING LIMITED

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