MARKET UPDATE JULY 4, 2017
The volatility on the floor Nigerian Stock Exchange
continued as the indices inched up in the early hours of Tuesday’s trading
before closing lower to end the day, as investors await Q2 numbers, amidst
continued profit taking. It is important to note the rate of demand for
equities as revealed by the trading volume
index at 0.44 on a buying position of 1%, while selling was 99% of the total
volume traded. This signaled negative sentiments ahead of the earnings
reporting season. However, the investing public should not panic as opportunity
for reversal is high if the trend does not breakdown the next support level of
32,000 and below the blue trend line.
As the factors that brought the market
high in June is still partially intact as traders and investors are looking
forward to see the Q2 numbers confirming the positive economic data and the
recovery so far. Seeing that CBN had successful managed foreign exchange
measures to stabilise the naira and narrow the wide gap between the official
and parallel markets' exchange rates. However, since April, the apex bank had introduced forex window for investors and
exporters, which allows traders to swap naira for dollars at market-determined
rates, it seems to have become a historical date in the annals of forex
management in the country, despite the up and down movement of the oil price
that is the nation major source of revenue.
Stock markets around the world were
mixed to close lower as investors increasing tensions on the Korean peninsula
supported safe-harbors including the yen, bonds and gold. A holiday in the
United States and a dearth of major data kept activity muted, but the
expectation of Federal Reserve's last meeting proceedings
could add some impetus to the market.
The
composite NSE All-Share index shed 359.60
basis points yesterday to close at
32,410.20 after opening at 32,769.80 points, representing a 1.10% decline on average
traded volume of the market, but higher
than the previous day trade volume. . Similarly, market capitalisation for the
day fell by N162.00 to close at N11.17 trillion from an opening value of N11.33
trillion, representing 1.43% value decline as Ashaka Cement was delisted
yesterday.
Price depreciation in the share of UBA, Zenith Bank, Flourmills, NB, Guranrty
Trust Bank, Guiness, Conoil, Julius Berger, Stanbic IBTC , Oando and FBNH impacted negatively on the All-Share index,
reducing its year-to-date return to 20.60%, just as market capitalisation for
the same period stood at N1.92 trillion, representing a 20.79% gain above the
year’s opening value.
Market
breadth remained negative as the number
of decliners outnumbered advancers in
the ratio of 33:10 on a high volume of
trade to continue three day bear run.
Market
activities in terms of volume and value were up by 27.00% and 12.19%
respectively to 206.18 million shares from previous day’s 162.35 million and
N1.70 billion, compared to the previous days of N1.52 billion.
Transactions
in the shares of FIDELITY BANK, ACCESS BANK, FBNH, STERLING BANK and TRANSCORP
topped the volume chart to close the day’s trade.
At
the end of the day trading Redstar
Express topped the advancers’ log with
its share price gaining 10.14% to close at N5.32 each, on impressive Q4 numbers
and 40 kobo dividend. It was followed by Honey well Flour with 9.84% gain to close at N2.12 per share,
on impressive Q4 numbers and 6 kobo dividend
ahead of it Q1 numbers.
On
the flipside, Neminth led the decliners’
log, after dropping 8.54% to close at N0.75 on profit taking, ahead of UBA
5.75% to close at N8.20 each on profit booking from the recent rally.
The
management of Guinness Nigeria Plc got SEC and NSE approval for right issue of
N59.7 billion. The first Q2 result was released by Infinity Trust Microfinaice
while ETI filed for late releasing of it Q2 audited report.
TODAY’S OUTLOOK
As
the market opens this morning, expect mixed performance as more company releasetheir
Q2 earnings reports with Infinity Trust
released of its numbers to kick start
the earnings reporting season. Investors should not panic on the any 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 up
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