MARKET UPDATE FOR JUNE 28, 2017
Nigeria equity market on Wednesday had a
definite turn-around on improved demand for stocks after three straight days of
pullback as a result of massive sell-off that coincided with profit booking and
reaction to the non-inclusion of Nigeria in the last review of the Morgan
Stanley Capital International (MSCI) Frontier
market index of emerging markets.
The Nigerian Stock Exchange (NSE) benchmark
index gapped after being down at the early hour of the trading session, and
retraced up dramatically. The price appreciation of high cap stocks triggered a
very strong rally that ran into the closing hours and consolidated.
The day’s trading volume index stood at
0.77 on a buying position of 100%, while selling volume was 0% of the total
volume traded.
As the market looks forward to another
positive Purchasing Managers’ Index (PMI) for the month of June, and ahead of the
Q2 earnings reporting season which is likely to trend up in continuation of the
first quarter corporate numbers that were positive and strong and had continued
to support the current upsurge in prices. In addition to improving
macro-economic indices that confirm economic recovery.
Stock markets around the world were
mixed to close Wednesday higher, despite oil price sliding down and global rates
oscillating as the European Central Bank (ECB)intends to set expectations that it
might be moving toward the exit doors on QE and zero interest policy. This
bottomed out world rates that propped US rates further. The Bank of England
piled on yesterday talking about rate normalization soon, which might be the
beginning of another global tightening that would affect assets classification
and movement in the world economies and markets.
Meanwhile, the composite NSEAll-Share
index gained 535.16 basis points to close at
32,657.30 after opening at 32,122.14 points, representing a 1.67% growth on
above average traded volume of the market. It was however marginally lower when
compared to previous day’s transaction level. Similarly, market capitalisation
for the day was up by N185.06bn to close at N11.29tr, from an opening value of
N11.11tr, representing 1.67% value gained.
The upturn in share of prices of highly
capitalized equities impacted positively on the All-Share index, raising its
year-to-date return to 21.52%. Also, growth in market capitalisation for the
same period stood at N2.21tr, representing a 22.16% gain above the year’s
opening value.
Market
breadth for the day was positive as the number of advancers outpaced decliners
in the ratio of 26:21 on high volume of trade to halt the three straight days
of bear transition.
Market
activities in terms of volume and value were mixed as traded volume was down by
7.50% to 386.24m shares from previous day’s 417.57m, while value was up by
1.75% to N3.3bn against the previous day’s
of N3.25bn.
Transactions
in the shares of UBA, WEMA BANK, GUARANTY TRUST BANK, FCMB and TRANSCORP topped
the volume chart to close the day’s trade.
At
the end of trading, UBA topped the advancers’ log with its share price gaining
8.17% to close at N9.00 each, on expectation of Q2 numbers, among others. It
was followed by NEM 7.37% gain to close at N1.02 per share, on market forces
and expectation of closure date for 6 kobo dividend ahead of it Q2 numbers.
On
the flipside, Okomu OilPalm led the decliners’ log, after dropping 4.99% to
close at N58.49 on profit taking, while Julius Berger followed with 4.99% to
close at N39.45 each on profit taking.
The
management of Unilever Plc yesterday announced the submission of its
application to The Exchange for approval and listing of a Rights Issue of
1,961,709,167 Ordinary Shares of 50 Kobo each at N30.00 per share. Allotment is
on the basis of 14 new ordinary share for every 27 ordinary share held.The
qualification date for the said right issue is 28th June, 2017.
The
management of Conoil Plc announced its plan to propose a cash dividend of N3.10
per share in its 47th AGM scheduled for August 11, 2017. According
to the report, if approved, dividend warrant would be posted on the August 12.
Closure date is July 7, 2017.
TODAY’S OUTLOOK
As
the market opens this morning, expect mixed performance due to end of the month
window dressing and continue repositioning in value stocks ahead Q2 earnings
season. Investors should not panic on the recurrent pullbacks if they have
taken 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. For stocks that should be on your shopping list to buy in this up
market or pullback sign up for investdata buy & sell signal setup by calling
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