MARKET UPDATE FOR OCTOBER 16, 2017
INVESTORS, TRADERS RETURN AHEAD Q3, YEAR-END
POSITIONING, ECONOMIC DATA INFLOW
The nation’s stock market had a positive, even if volatile Monday to
start the week in consolidation of the three trading sessions of up market as earnings
speculation trading which had commenced earlier entered top gear with hope of
more numbers hitting the bourse in the coming days.
The first banking sector earnings report was made available by the
directors of United Bank for Africa Plc during the session, giving an insight into
the kind of third quarter reports that traders and investors should expect from
its peers, especially the first tier stocks.
The day opened slightly up before having back and forth movement by the
mid-morning trading as it searched for intraday direction until midday when highly
capitalized stocks appreciated in value amidst continued positioning ahead of
their nine-month numbers. As a result of this, there was an increased demand for
banking, consumer goods, agribusiness and Industrial goods stocks during the
session. There was a breakout of the recent resistant level of 36,888.48 to
intraday high of 36,972.27, from a low of 36,847.15 to close the day higher on
a mixed sentiment as profit taking at interval by traders remain strong.
The continued Central Bank of Nigeria (CBN) intervention in the foreign exchange market continues to impact positively on the inflationary numbers since the month of February, as well as the strong backward integration in the nation’s manufacturing sector to further boost numbers from the consumer goods sector. Already, market players expect Q2 and Q3 earnings from companies in that sector.
Also important is the nation’s sustained growth in external reserves amidst the continued CBN FX intervention, which is a plus for the market as the price of oil keeps rising, a situation expected to boost government revenue and enhance implementation of the 2017 budget. As part of the spending plan in this fiscal year, the Federal Government plan to infuse 50% of the capital projects for 2017 Appropriation Act into that of 2018, at a time dwindling revenue is making a mess of its infrastructure fixing plans. The planned infusion would make the 2018 budget the nation’s all-time biggest, but implementation style and disbursement strategies of the government has made Nigerians and the economy not to feel the impact of huge spending plan so far.
Meanwhile, the composite NSE All-Share
index gained a marginal 123.10 basis points to close at 36,971.27 from an
opening figure of 36,848.17 basis points, which represented 0.33% rise, just as
market capitalisation for the day went up N42.27bn to close at N12.73tr, from
the previous session’s N12.68tr, representing a 0.33% appreciation in
investors’ worth. The upturn in the share prices of blue chip stocks like
Zenith Bank, Stanbic IBTC, ETI, National Salt, Flourmills, Presco, Guaranty
Trust Bank and Dangote Cement, impacted positively on the ASI’s year-to-date
return which stood at 37.57%, just as market capitalisation has grown by N3.5tr
YTD, representing a 37.62% rise above the year’s opening value.
Market breadth for the day was positive as the number of advancers outpaced
decliners in the ratio of 24:15 on a low volume traded
that was higher than previous day’s level to continue Friday up market.
Market activities for the day, in terms of
volume and value, were up by 37.18% and 24.10% respectively to 214.96 million shares
worth N2.73 billion, up from previous day’s 156.70 million units valued at
N2.20 billion.
Transactions in the shares of Transcrop, UBA, Guaranty
Trust Bank, FBN Holdings and FBNH topped the volume chart.
As noted earlier, UBA announced it third quarter
earnings report which came positive and impressive, with top and bottom line in
the northward direction.
At the close of the day’s trading, C&I
Leasing topped the advancers’ table, chalking 9.55% to close at N1.95 per share
on market sentiment, followed by Fidelity Bank and Nahco with
5.00% respectively to close at N1.47 and N3.57 per share on market forces
ahead of Q3 numbers. On the flipside, Learn Africa lost 5.00% to close at N076
on market forces/sentiments, followed by Medview Air which shed 4.40% to close
at N1.52 per unit on market forces.
TODAY’S OUTLOOK
As the market opens this morning, expect
volatility to persist owing to positioning ahead of more earnings releases and
economic data.
One thing that is clear in the current market
situation is that smart investors are accumulating and enhancing their
positions in selected stocks.
Again, we advise that investors allow numbers to
guide their decisions while repositioning for the rest of the year trading activities,
especially now that prices of stocks are looking down amidst improving economic
and market fundamentals.
It is time to use your technical tools to take decision by knowing
the support and resistant level to reposition or exit any position. Market is in phases know it in order to
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