NSE INDICATORS CONTINUE NORTH, DESPITE POLITICO-ECONOMIC DOWNSIDES

MARKET UPDATE FOR JUNE 1, 2017

The first trading day of June started off with a big gap up that was successfully sustained till the end of the day on a high volume of trades to continue the market supply bang experienced in May with positive sentiments pushed equity prices high. 

INVESTDATA RESEARCH notes that in the last four years, the month of June had experienced mixed performance, twice (2014 and 2016) recording up market that surpassed the performance in May. On the strength of factors that had driven the market to this level and are still intact ahead of the earnings season for March year-end and Q2 earnings reporting season, there are indication that June may outperform the month of May as earnings is around the corner.

Also important a factor that would drive the market this month is the continued intervention by the Central Bank of Nigeria (CBN) in the foreign exchange market in its bid to stabilize and thereafter stabilize the Naira against major currencies of the globe. This is despite the controversy over the failure of Acting President YemiOsinbajo to sign the 2017 budget into law, weeks after its passage by the National Assembly, six months into the year.

Analysts have expressed surprise at the delayed assent to a budget amidst expectations from the government’s Economic Recovery and Growth Plan, as well as expectations about Nigerian coming out of recession and assurances that the hard times is over.It is also agreed that Nigeria’s emergence from recession is not rocket science,at a time the needful have not been done and it has taken the Muhammadu Buhari administration almost half a year to get its budget passed, after which it is delaying the much needed assent to the budget, there setting back the much needed implementation that is the starting block, if the government is to achieve the milestones recorded in the ERGP.  It is obvious that the CBN induced recovery gaining ground, as naira continues to appreciate against other currencies. The apex bank, in keeping with its resolve has sustained the intervention and continued to meet the supply side of the forex market.It is important to warn that the Federal Government should not with its current attitude deflate this rekindling confidence in the economy’s recovery mode and the improving momentum in the stock market.

Meanwhile, the NSE’s composite All-Share index gained 815.83 basis points on Thursday to close at 30,314.14, after opening from 29,498.31 points, representing a 2.77% 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 rose by N282.04 billion to close at N10.48 trillion, from an opening value of N10.21 trillion, representing a 2.77% appreciation 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 12.80%, while market capitalisation for same period stood at N1.23tr, representing 13.33% above the year’s opening value.

Market breadth for Thursday 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 on Thursday in terms of volume and value were up by 26.59% and 38.09% respectively to 434.43m shares from previous day’s 343.19m shares and N4.63bn from previous day’s N3.34bn. Transaction in the shares of UBA, DIAMOND BANK, ACCESS BANK, FCMB AND FBNH top the volume chart to close the day trade.

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

At the end of yesterday trading session, FBNH topped the advancers’ table with its share price gaining 10.00% to close at N5.83 per share, purely on market forces and expectations of its new risk management mode likely to boost top and bottom lines going forward. It was followed by May & Baker with 9.00% gain to close at N1.63 per share also on the backdrop of the forces of demand and supply. 

On the flipside, Linkage Assurance led the decliners’ table, dropping 9.52% to close at N0.57 also on the interplay of demand and supply; Oando followed with a 5.33% to close at N8.00 each on profit taking.

As market opens this morning, expect mixed action of profit taking and repositioning in value stocks to continue as the last trading day of the week, 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 and the upcoming Traders & Investors workshop call 08032055467 and 08111811223

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