NIGERIA’S INDEX SUSTAINS UPTREND AS Q2 SEASON PEAKS, INVESTORS KEEP EYES ON TRANSCORP
Market Update for July 19, 2017
Nigeria’s
stock market indices had a good day nonetheless on Wednesday asthe volatility
and mixed performance continued even as it sustained its 10th straight
dayof uptrend on above average traded volume. The market from the opening hour gapped
up to consolidated a continuation
chart pattern until almost the close of
the day’s trading before pulling back marginally to 33,514.93 after touching an
intraday high of 33,658.67 at midday,holding support above the last resistance
level.
At the end
of the day, the index continued to move higher, amidst expectation of more
positive Q2 numbers as the earnings reporting season enters its peak, which is lower
than its recent height of 34.384.70.
Africa
Prudential Plc’s impressive Q2 scorecard may have given an insight into what investors
should expect of some companies this season, considering the impact of
investment income on the bottom line of Afriprud and its sister- United Capital,
and despite the flat position of Wema Bank financials for second quarter.
The volume traded index at 0.83 as buying position was 35% while selling
volume was 65% of the total transaction for the day. The NSE Consumer Goods
index closed flat as traders were taking profit while investors are waiting for
more earnings reports from the sector. The retracement in the sectoral index of
financial services and petroleum marketing on Wednesday shows repositioning by
investors in stocks within these sectors to take advantage of the earlier
pullbacks ahead of Q2 interim dividend payment, that are historical common to some
of the companies in both sectors.
Meanwhile, the composite NSE All Share index gained 78.62 basis points
on Wednesday to close at 33,514.93 after opening at 33,436.61 points,
representing a 0.23% growth on above average market traded volume that was
lower than previous day’s trades. Similarly, market capitalisation was up by
N26.99bn to close at N11.55tr from an opening value of N11.52tr, representing a
0.23% value gain for the day.
The upturn in the share price of NB, GTBank, UBA, Zenith Bank,
ETI, Stanbic IBTC, FBNH, Okomu Oil, Guinness, Seplat, Oando and PZ impacted the
All-Share index to boost year-to-date returns to 24.71%. Also, market
capitalisation over the same period improved by N2.29tr, representing a 24.96% notch
above the year’s opening value.
Market breadth for Wednesday was slightly positive but weak as the
number of advancers outpaced decliners in the ratio of 25:24 on a high volume
of trade to continue the 10-day up market in a row. Market transaction in terms of volume and
value were down by 86.21% and 84.98% respectively at 331.43m shares worth N3.24bn,
from the previous day’s 2.4bn units valued at N21.61bn.
Activities in the shares of Zenith Bank, UBA, FBNH, Custodian and NEM
Insurance topped the volume chart to close the day’s trade.
At the end of the day’s trading activities, Transcorp topped the
advancers’ log, gaining 8.76% to close at N1.49 each on expectation of its Q2
numbers and impact of government disbursement of N17.6bn to the power sector
against the background of the fact that its power distribution subsidiary
(Transcorp Power) is now Nigeria’s highest power generator at peak of 530 megawatts,
representing 18% of all power in Nigeria last week. The company assured on its
twitter handle during the week that the achievement is not happenstance, being
the outcome of a planned intervention and investment expected to make investors
better off on the medium to long-term. In the words of Tony Elumelu, chairman
of Transcorp Plc: “We took over the Ughelli Power plant (now Transcorp Power
Ltd) in 2013 and it was generating 160mw of power. Today, after investing over
$300m we are at 670Mw.”
Transcorp was followed by Skye Bank with a 5.00% gain to close at
N0.63 per share, on market forces and extension CBN guaranty, added to its recovery
of N60bn from its pool of toxic loans.
On the flipside, Presco led the decliners’ log after dropping 4.99% to
close at N61.32 on profit taking activities of investors and traders. It was
followed by MRS Oil’s 4.99% decline to close at N35.44per unit on market
forces.
TODAY’S OUTLOOK
As trading opens this morning, expect the uptrend to continue as more
companies release their Q2 numbers and the earnings reporting season enters its
peak period. 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.
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.
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 continue to rally and activities in the various sectors identified as
those to invest in this second half of 2017 are looking 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
Phone
08028164085, 08032055467
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