MARKET UPDATE FOR JULY 5, 2017

VOLATILITY, CAUTION CONTINUE, AS INVESTORS AWAIT Q2 EARNINGS REPORT

The market indices on Wednesday continued its intraday volatility on mixed sentiments to close lower for the repeated time. The reduced rate of decline and the improved volume of trade are indicating traders last minute’s portfolio repositioning with the Q2 earnings reporting season gradually kicking off.  The trading volume index of 0.66 on a buying position of 46%, while selling was 54% of the total volume traded revealed that demand for stocks again is looking up, despite the previous three-day selling pressure that had befallen the market.

However, the investing public should not panic as opportunity for reversal is high if Wednesday’s trend of up demand continued as more companies released their closed period and actual numbers to the market. We are still watching for a reversal or breakdown of the next support level of 32,000 or below the blue trend line. 

As we have always noted in Investdata, the fiscal policy or intentions of the government as expressed in its Economic Recovery &Growth Plan are not enough to drive the much needed recovery, especially given that the implementation style of the 2015 and 2016 budgets have not impacted the economy, even as we expect the disbursement of funds in the third quarter to kick start implementation of this years pending plan. Also the over clowding of the financial market by the government is slowing down the participation of private sector players, given that the high and irresistible rate at which government borrows is unaffordable for private companies, limiting their access to source of funds locally. This has forced many of such companies that can afford it to look outside for low rate funds, despite the foreign exchange risk and problems associated with external borrowing.

According survey data released by IHS Market on Wednesday, Nigeria’s private sector growth slowed to its lowest level in four months in the month of June, yet the pace of expansion remained robust, supported by strong gains in both new orders and output. The survey showed that new export orders returned to growth in May after contracting for the most part of the past two years. This has been the impact of the new Central Bank of Nigeria (CBN)foreign exchange policy to make liquidity available in the investors and exporters window of the market.

Meanwhile, the composite NSE All-Share index shed 107.88 basis points on Wednesday to close at 32,302.32 after opening at 32,410.20 points, representing a 0.33% decline on above average traded volume in the market which is higher than the previous day trade volume.

Similarly, market capitalisation for the day went down by N36.69bn to close at N11.13tr from an opening value of N11.17tr, representing 0.33% depreciation in value.

Value loss in medium and high cap stocks impacted negatively on the All-Share index, reducing its year-to-date return to 20.20%, just as market capitalisation for the same period stood at N1.91tr, representing a 20.46% gain above the year’s opening value.

Market breadth remained negative as the number of decliners outpaced advancers in the ratio of 33:11 on a high volume of trade to continue four day down market.  

Market activities in terms of volume and value were up by 51.02% and 74.71% respectively to 311.38m shares from previous day’s 206.18m and N2.97bn, compared to the previous day’s N1.70bn.

Transactions in the shares of NIGER INSURANCE, FBNH, ZENITH BANK, UBA and TRANSCORP topped the volume chart to close the day’s trade.

At the end of the day’s trading,Berger Paints topped the advancers’ log with its share price gaining 7.21% to close at N7.17 each, on market forces; followed by UBA with 5.00% gain to close at N8.38 per share, on a strong earnings expectations ahead of it Q2 numbers.

On the flipside, Flour Mills led the decliners’ log, after dropping 10.00% to close at N23.14 on profit taking and the decline in its profit; ahead of Unilever Nigeria’s 6.78% to close at N35.03 each also on profit taking and fear of share dilution arising from its public offering.

TODAY’S OUTLOOK

As the market opens this morning, expect mixed performance as more companies are expected release their numbers asthe earnings reporting season continues. Investors should not panic on the pullbacks if they have taken position based on strong numbers and future prospects of any stock. But quickly bail out when your expectations are not met when the actual figure hit the market to cut loss.

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. For stocks that should be on your shopping list to buy in this oscillating market or pullbacks. Sign up for investdata buy & sell signal setup by calling 08032055467.

NSEASI DAILY TIME FRAME

Attention! Attention!! Attention!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Workshop on COMPREHENSIVE SHORT-TERM TRADING STRATGIES FOR REST OF THE YEAR & BEYOND

Sub Topics:

1. The Toolbox of Successful Traders & Technical Analysts- Mr Meshach Ukpoma, FX Analyst/Trader

2. Outlook and Implications of the 2017 Budget & Petroleum Industry Governance Bill (PIGB) on Nigeria’s Stock Market and Economy- AbiolaRasaq, Group Head Investor Relations, UBA

3. A Strategic Outlook; The Fusion of Fundamental & Technical Analysis- Ambrose Omordion, Chief Research Officer Investdata Consulting Ltd

4. Understanding Market Timing to Manage Risk, Using Technical Analysis - Mr. Abdul-Rasheed  Momoh, Head, Capital Markets, TRW Stockbrokers Limited

The workshop holds on:

DATE: 15 July 2017

TIME: 9.00am

VENUE: Ostra Hall & Hotel, Behind MKO Abiola Gardens, Opposite NNPC Gas Plant, CBD, Alausa, Ikeja. Lagos.

The fee is N20, 000 per participant. Payment made a week before the date of the event attracts 10% discount. Companies sending more than two representatives would enjoy a 15% discount.  Payment should be made into: Zenith Bank; Account Name: InvestData Consulting Limited; Account Number: 1013033032.

For more enquiries about the programme, please call 08032055467, 08179547605, and 08111811223  

MR. OMORDION AMBROSE

CHIEF RESEARCH OFFICER

INVESTDATA CONSULTING LIMITED

ambroseconsultants@yahoo.com

TEL:01-4724645, 08028164085