INVESTORS EYE ROBUST EARNINGS REPORTS, ECONOMIC DATA FOR SUSTAINED BULL-RUN ON NSE

MARKET UPDATE FOR JULY 17, 2017

The nation’s stock market opened the week on a positive note to continue its up trend, marginally breaking out the first resistance level at 33,261.66 on improved volume of trade to reflect the earnings reporting season sentiments which United Capital and Unilever kicked off, presenting mixed performances.

The increasing demand for consumer goods ahead of their quarterly numbers revealed high hope for better performance as recent numbers emanating from the industry showed strong recovery. This is against the backdrop of the Central Bank of Nigeria’s continued intervention in the foreign exchange market, which is having positive impact on numbers from the sector, even as economic fundamentals continue to improve. Monday’s holding was just above the record levels set on Friday. Reason for the slow start? Earnings. That's right, it is another earnings season and we're kicking off a big week of earnings with impressive and even robust numbers from Unilever.

The two-day pullback in the NSE Banking index is creating opportunities for investors and traders to reposition ahead of expected interim dividend payment from players in the sector.   The inflation figure for June released on Monday by the National Bureau of Statistics (NBS)at 16.1% came in line with market expectation of further decline from 16.25% in the month of May to 16.10% resulting in five consecutive months of declines. Many analysts were however somewhat disappointed having expected that the figure would come at below 16%. 

Stock markets around the world closed higher as oil prices strengthened on Monday, supported by a slowdown in the growth of rigs looking for crude in the United States and because of strong refinery demand from China. In addition to continued weakening of the US$ against other world currencies as traders exit their forward positions. 

Meanwhile, the benchmarkNSEAll-Share Index gained 39.77 basis points on Monday to close at 33,301.43 after opening at 33,261.66 points, representing a 0.12% growth on  high volume traded that was marginally  higher than previous day’s trades. Similarly, market capitalisation was up by N13.71bn to close at N11.48tr from an opening value of N11.46tr, representing a 0.12% value gain in investors’ portfolios.

The upturn in the share price of Unilever, Nestle, Flourmills, NB, 7UP, FO, Okomu Oil, ETI, Zenith Bank, GTBank and Dangote Cement impacted the All-Share index, to boost year-to-date returns to 23.91%. Also, market capitalisation over the same period improved by N2.23tr, representing a 24.10% gain above the year’s opening value.

Market breadth for the day was negative as the number of decliners outnumbered advancers in the ratio of 27:23 on a high volume of trade to continue the eight-day up market.

Market activities in terms of volume and value were mixed as volume was up marginally by 3.60% to 322.81m shares from the previous day’s 311.61m while value was down by 16.40%to N2.73bn, as against the previous day’s N3.27bn.

Transactions in the shares of Niger Insurance, FBNH, FCMB, UBAand Flourmills topped the volume chart to close the day’s trade.

At the end of the day trading, Forte Oil topped the advancers’ log,gaining 7.71% to close at N60.50 each on expectation of its Q2 numbers with improvement in its power business impacting bottom line. It was followed by 7-Up with a 6.41% gain to close at N94.95 per share, on market forces and expectation of its Q1 numbers to bring hope after a dismal full-year performance. 

On the flipside, Oando led the decliners’ log after dropping 9.54% to close at N6.83 on negative market sentiment, following news report of an ongoing investigation by the Securities & Exchange Commission(SEC). It was followed by Nascon’s 5.00% decline to close at N9.03 on market forces and profit taking. 

TODAY’S OUTLOOK

With the market opening this morning, expect the uptrend to continue as more companies release their Q2 numbers and the earnings reporting season enters its peak period, in addition to market reactions to the June inflation rate of 16.10%. Investors should not panic on the pullbacks if they have taken position based on strong numbers and future prospects of any stock, but fix their gaze on the actual numbers and bail out when expectations are not met, thereby cutting their loss. 

Again, we advise that investors allow numbers to guide their decisions while repositioning for the rest of the year’s trading activities, especially now that prices of stocks are looking up ahead of the improving 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. 

We must stressed for the repeated time 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 oscillating market or pullbacks.  Sign up to INVESTDATA BUY AND SELL signal setup by calling 08032055467.

Meanwhile, we say a very big THANK YOU to all participants that made the INVESTDATA workshop a huge success, even as stocks recommended during the workshop have started rallying and activities in the various sectors identified as those to invest in this second half of 2017 continue to look up and promising to lead the rest of the year in performance and returns.

To book for the WORKSHOP VIDEO and SOFT COPIES of WORKSHOP MATERIALS send YES to 08028164085 and 08111811223

MR. OMORDION AMBROSE

CHIEF RESEARCH OFFICER

INVESTDATA CONSULTING LIMITED

ambroseconsultants@yahoo.com

Phone 08028164085, 08032055467