MARKET UPDATE FOR JULY 26, 2017
Nigeria’s equity market at the end of midweek’s trading had a volatile
day, with strong volatility at the opening and end.
The day started out with a pullback to intraday low of 35,504.88 and
made a three year new high of 37,794.22 to close higher in continuation of its 15-day
bullish run with highly capitalized stocks recording value gain on the strength
of increasing demand for blue-chips in expectation of their Q2 numbers. Many
investors and traders also used the blue-chips to build hedges in their portfolios.
The day’s volume traded index was 0.94; buying position, 96% and selling
volume, 4% of the total transaction. Sectoral indexes were higher as investors
and traders took position in different sectors with expectation of their Q2
scorecards.
The increasing inflow of foreign portfolio investors into the market
continues to be driven by the flexible exchange policy of the Central Bank of
Nigeria (CBN)which has helped to stabilize the rate of the Naira. In particular,
the import and export window of the FX market continues to get more liquidity
from oil companies, export businesses and banks, while the CBN plays the supervisory
role. This is gradually impacting positive on the corporate performance and
macro-economic indices.
With the economy or markets of the developed world are headed for crash
in no distance time, which will affect U.S., Europe and Japan, many foreign
institutional investors are looking at emerging markets, particularly Africa as
preferred destination to diversify their portfolios. Many of these investors
have over the years identified the infrastructural challenges on the continent
and the huge investment opportunities they present, especially with Nigeria the
largest economy in Africa in recession and South Africa, the second largest
economy going into recession. This makes Nigeria’s stock market a preferred destination
for Foreign Portfolio Investments (FPI), at a time transparency in the Nigerian
market remains high.
Meanwhile, the benchmark All-Share Index gained 1207.77 basis points
to break into its three-year psychological line of 36,000 on above average
market traded volume to close at 36.740.77 from an opening figure of 35,533.00
points, representing a 3.40% growth. Also, volume transacted for the day was
lower than previous day’s, even as market capitalisation went up by N416.36bn
to close at N12.66tr from the opening value of N12.25tr representing a 3.4%
growth to enhance investors’ positions.
Price appreciation in low, medium and high cap stocks boosted the
All-Share index year-to-date returns to 36.71%. Also, market capitalisation
over the same period improved by N3.25tr, representing a 36.94% growth over the
year’s opening value.
Market breadth for Wednesday’s session was positive as the number of
advancers outnumbered the decliners in the ratio of 31:17 on average volume of
trade to continue the 15 day up market. Market activities in terms of volume
and value were downby 34.89% and 21.10% respectively at 335.34m shares worth
N4.64bn, from the previous day’s 513.45m units valued at N5.9bn.
Transactions in the shares of FBNH, UBA,Access Bank, Zenith Bank and Fidelity Bank topped the volume chart to
close the day’s session.
At the end of trading activities, Conoil topped the advancers’ log,
gaining 10.21% to close at N33.04 each on the back of its expected Q2 numbers.
It was followed by Fidson Healthcare with a 10.06% gain to close at N3.39 per
share, on market forces and expected impact of government policy on the health
sector to influence its numbers going forward.
On the flipside, Aiico Insurance led the decliners’ log after dropping
5.26% to close at N0.54on profit taking activities, following its unimpressive
Q2 numbers, ahead of SCOA’s 4.77%
decline to close at N3.09per unit on market forces as this company has been
inactive on the exchange.
TODAY’S OUTLOOK
As trading opens this morning, the market is expected to continue
riding on the prospect of more Q2 numbers being released amidst countdown to
the end of this earnings season. Already, investors and traders have reacted to
the mixed numbers released so far, receiving positively to surprises, while
treating disappointing earnings otherwise.
However, it is advisable to expect a blend of surprises and
disappointment from the companies reporting their numbers, even as investors need
not panic if any pullback occurs now due to profit booking, if they have taken
position based on strong numbers and future prospects of any stock. You should
therefore fix your gaze on the actual numbers and bail out when expectations
are not met, thereby cutting their loss.
Money management in equity trading and investing is very important as
picking the right stock at the right time, as the market is expecting Q2
interim dividend from banking, insurance and petroleum marketing stocks.
Investment is all about expectations and returns. Look at this simple mathematics of profitable
trading/investing, dividend history of the banking stocks shows that GTBank
pays interim of 25 kobo, UBA pays 20 kobo, Zenith Bnak pays 25 kobo, AccessBnak
pays 25 kobo while Stanbic is inconsistent with its interim payout. N100,000 capital will give you 2564 units of Guaranty, 10,000 units of
UBA, 4000 units of Zenith and 9523 units of Access Bank. Your dividend income
not excluding holding tax in Guaranty is N641, UBA is N2000, Zenith Bank is
N1,000 and Access Bank is N2381, Let this guide you as buy banking stocks for
interim dividend.
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.
Be reminded once more 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.
Grab your home study pack today and
ride with the recovery stock market and economy.
The workshop video can be view in
your phone, laptop and television. The cost of the home study pack is N20, 000
including DHL delivery at your door step.
Payment should be made into Investdata Consulting Ltd, Zenith Bank
1013033032. When payment is made, kindly send details to 08032055467,
MR.
OMORDION AMBROSE
CHIEF
RESEARCH OFFICER
INVESTDATA
CONSULTING LIMITED
Tel:
08028164085, 08032055467
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