MARKET UPDATE FOR OCTOBER 17, 2017
TRADERS AGAIN TAKE PROFIT, AMIDST WAIT FOR MORE
Q3, GDP NUMBERS
Trading on the floor of the Nigeria
Stock Exchange (NSE) on Tuesday continued its volatility to close on a negative
note, after losing almost all its gain in the previous three trading sessions,
on the strength of profit taking by traders which is expected in any earnings
reporting season, especially when the growing number of market players are
short-term investors, including retails players.
The down market coincided with the release of September inflation rate
by the National Bureau of Statistics (NBS) which dropped slightly for the eighth
consecutive month to 15.98% from 16.01% in August. The marginal decline in the
month, which coincides with the harvest period, is of concern to investors,
suggesting that the celebrated success in agricultural sector is still shaky,
meaning that either there is poor harvest or infrastructure like roads to
transport farm produce to markets in the city centre. This has often led to
waste of farm produce, most of which rot before arriving the markets, such that
the little that make it there become expensive due to high cost of
transportation, and other operational costs that are built-in.
The situation could have been worse, if not for the sustained
intervention by the Central Bank of Nigeria (CBN) in the foreign exchange
segment of the inter-bank market, without which there could have been imported
inflation induced by FX scarcity.
This is where the fiscal authorities should come in, especially
through a rethink of the current implementation of the 2017 budget, by seeking
other more viable means of funding road and railway reconstruction across the
country particularly to ensure real and sustained economic growth.
Tuesday’s trading session started with the benchmark All-Share index
moving downside, before moving back and forth, reaching support and holding
twice between the mid-morning and midday, as profit taking in highly
capitalized stocks like Dangote Cement, NB, Guaranty Trust Bank, Mobil Oil and
other low caps recorded cash gains.
Market
traded volume was low with a stronger selling pressure as revealed by the
volume index for the day that stood at 0.85, while buying position was at 0%
and 100% selling volume of transactions to halt the bull transition.
Meanwhile, the NSE All-Share index shed
301.66 basis points to close at 36,669.61 from an opening figure of 36,971.27
basis points, which represented 0.81% decline, just as market capitalisation
went down N103.84bn to close at N12.62tr, from the previous session’s N12.72tr,
representing a 0.81% value loss in investors’ portfolios. The downturn in the
share prices of low, medium and high caps stocks were impacted by the expected
profit booking by traders, which had a negative influence on the ASI’s
year-to-date return, dragging it to 36.45%, just as market capitalisation notched
N3.4tr YTD, representing a 36.50% rise above the year’s opening value.
Market breadth was marginally positive as the number of advancers outnumbered decliners in the ratio of 22:21 on
a low volume traded that was lower than previous day’s level to halt
Monday bull market.
Market activities for the day, in terms of
volume and value, were mixed as the volume was down marginally by 1.44% to
211.87m shares from previous day’s 214.96m units while value was up by 73.63%
to N4.74bn from N2.73bn on Monday.
Transactions in the shares of Fidelity Bank,
Zenith Bank, GTBank, Access Bank and UBA topped the volume chart.
At the close of the day’s trading, International
Breweries topped the advancers’ table, chalking 5.72% to close at N44.31 per
share on market sentiments and Q2 earnings expectation, followed
by Jaiz Bank with 4.42% to close at N0.68 per share on market forces. On the flipside, Redstar Express lost 9.16%
to close at N4.96 on profit taking followed by Neimeth which shed 8.17% to
close at N0.62 per unit on profit booking.
TODAY’S OUTLOOK
As the market opens this morning, expect
volatility to continue in the midst of positioning and profit taking ahead of
more earnings releases.
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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