MARKET UPDATE FOR OCTOBER 19, 2017



DANGCEM, ZENITH Q3 NUMBERS INSPIRE CAUTION, AS NIGERIAN BOURSE IN SEARCH OF DIRECTION

It was yet another highly volatile trading session on the Nigerian Stock Exchange on Thursday, just as activities were mixed following which the benchmark All-Share index gyrated in a north and south movement and finally closed the day marginally higher. There was however an improved buying pressure, despite the low volume traded with a flat market breadth that revealed indecision on the part of market players which slowed down the profit taking as more earnings hit the market with impressive numbers.

The day started out with a slight movement down to the support level in the mid-morning, before rallying at midday, as demand for healthcare, consumer goods and banking stocks increased after Dangote Cement and Zenith Bank released their Q3 earnings reports that beat expectations. Dangote Cement and Zenith Bank reported Q3 Earnings Per Share (EPS) of N11.30 and N4.11 respectively, improving from the 2016 levels of N8.13 and N3.03 each. The market is however yet to react to these numbers which we believe investors will do after digesting the numbers and putting the figures in proper perspective. 

Thursday’s market traded volume was low with a stronger buying pressure as revealed by the volume index for the day that stood at 0.58, while buying position was at 66% and 34% selling volume of the day’s transaction. This halted previous day’s down market as the bourse continues its search for direction in the midst of mixed technicals and increasing number of corporate earnings being released ahead of Q3 GDP figures.
Meanwhile, Nigeria’s external reserves is rising steadily, amidst the sustained intervention in the foreign exchange segment of the inter-bank market by the Central Bank of Nigeria (CBN), a situation that continues to inspire investor confidence in the economy, just as crude oil price in the international market keeps rising. This is expected to boost government revenue and enhance implementation of the 2017 budget, if the needful is done by managers of the economy. We however note the Federal Government’s decision to roll part of this year’s capital spending plan into the 2018 budget, as contained in its 2018 to 2020 Medium-Term Financing Framework to the National Assembly.

At the close of Thursday’s trading, the All-Share Index survived by the whiskers, barely crawling 4.13 basis points up to close at 36,645.65 from 36,641.52 points, which represented 0.01% growth. Market capitalisation similarly inched N1.43bn up to close at N12.61tr, from the previous session’s N12.61tr, representing a 0.01% value gain.
The upturn in the share prices of  Dangote Sugar, International Breweries, Nestle, Dangote Flour, Cadbury, GSK, Fidson, Stanbic IBTC, Cutix, NEM and Eterna  impacted marginally  on the ASI’s year-to-date return, to move up to 36.36%, just as market capitalisation notched N3.37trillion YTD, representing a 36.40% rise above the year’s opening value.
Market breadth for the day  was slightly flat  as the number of decliners surpassed that of advancers  in the ratio of 20:19 on a volume traded that was lower than previous day’s level to halt two trading sessions of bear transition.

Market activities for the day, in terms of volume and value, were down by 33.05% and 41.89% respectively to 140.88 million shares value at N1.72 billion from the previous day’s 198.63 million units valued at N2.94 billion
Transactions in the shares of UBA, Sterling Bank, Guaranty Trust Bank, Zenith Bank and Skye Bank topped the volume chart.

At the close of Thursday’s trading, Cutix topped the advancers’ table, chalking 7.73%, to close at N2.37 per share, as investors continue to relish its offer of 18 kobo dividend per share, besides the activities of market forces. It was followed by International Breweries 4.99%, which announced some progress in its ongoing merger of sister companies in its bid to position amidst competition for market share in the Nigerian beer, stout and malt market. Interbrew closed at N46.52 per share, also amidst high hopes for its Q2 numbers.

On the flipside, AXA Mansard Insurance lost 4.84% to close at N2.36 on profit taking activities, followed by C & I Leasing, which shed 4.74% to close at N1.81 per unit on profit booking. 
Also, during the trading session, Wema Bank and Great Nigeria Insurance made their Q3 earnings available to the market.

TODAY’S OUTLOOK
As the market opens this morning, volatility may continue in the midst of positioning and profit taking, being the last trading day of the week, just as more earnings releases are expected to hit the market.  
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 manage your trading and investing risk. 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.
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