MARKET UPDATE FOR OCTOBER 4, 2017
VOLATILITY MAY PERSIST AMIDST PORTFOLIO REPOSITIONING AHEAD OF Q3
EARNINGS SEASON, YEAR-END
The nation’s stock market had a positive, even if volatile Wednesday.
The day started out with a move downside, before gravitating back and forth,
reaching support and holding twice between the mid-morning and midday, as
profit taking ensued in the Industrial Goods and Insurance sector. There was a
real strong intraday rally to a high of 35,500.23 from a low of 35,272.84 that
is becoming the new month’s support level. Since the market broke out of the
downtrend line it had consolidated sideways its movement in a narrow range,
waiting for positive news as earnings reporting at this point is light with
portfolio repositioning and speculative activities underway as the season
gradually kicked off with more companies announcing their Q3 closed period (when
their senior officials and directors who are shareholders of such companies are
forbidden from trading in them to prevent a situation where they take advantage
of price sensitive information they have by virtue of the office they hold).
It was a nonetheless positive day for banking stocks, especially the
first tier banks that have capacity to post positive Q3 numbers despite the significant
growth in non-performing loans in the sector, as the banks continually showing
a positive earnings trend so far.
As the government tries to further stimulate the economy by implementing the Ease of Doing Business action plan, promising to release part of the year’s capital budget very soon, even when we know the proposed amount is very small, compared to N2.3tr earmarked for infrastructural development in the 2017 budget. Also, there is the plan to move about 50% of the 2017 capital budget to 2018 as the government awaits approval of the National Assembly to fund the budget through external borrowing that would further balloon Nigeria’s external debt and the cost of servicing such on a yearly basis. This borrowing plan is also regardless of the nation’s improved crude oil output of about 2m barrel per day, at a time oil is selling above $55 at the international market, higher than the budget’s benchmark.
Meanwhile, the composite NSE All-Share index
gained a marginal 52.48 basis points to close at 35,358.57 from an opening
figure of 35,306.09 which represented 0.15% growth, just as market
capitalisation for the day went up by N18.26bn to close at N12.18tr, from the
previous session’s N12.17 trillion, representing a 0.15% appreciation in
investors’ position. The upturn in the share prices of medium and high cap
equities like Nestle Nigeria, Zenith Bank, Total, Stanbic IBTC, Access Bank, National
Salt and Honeywell Flour impacted positively on the ASI’s year-to-date return
which stood at 31.57%, just as market capitalisation grew by N2.93tr,
representing a 31.72% rise above the year’s opening value.
Market breadth for the day was slightly positive
as the number of advancers
outpaced decliners in
the ratio of 19:18 on a low volume traded that was lower than previous
day’s level to reverse Tuesday bear market.
Market activities for the day, in terms of
volume and value, were down by 72.46% and 53.02% respectively to 174.67m shares
worth N2.72bn, up from previous day’s 634.33m units valued at N5.79bn.
Transactions in the shares of UBA, FBN Holdings,
Zenith Bank, Access Bank and Guaranty Trust Bank topped the volume chart.
During Wednesday’s session, the NSE announced
the cancellation of 2,080,104,954 ordinary shares or 5.73% of United
Bank for Africa’s shares in issue from the Daily Official List. The cancelled
shares were initially held under the bank’s Staff Share Investment Trust Scheme
(SSITS) and have reduced UBA’s outstanding shares from 36,279,526,322 before
the cancellation, to 34,199,421,368 units (READ).
The NSE also announced the suspension of trading in the
shares of Academy Press, Nigerian German Chemical, Roads Nigeria and Thomas
Wyatt, over their failure to file their quarterly and full-year financials. In
doing so, the NSE it relied on “Rule 3.1, Rules for Filing of Accounts and
Treatment of Default Filing, Rulebook of The Exchange (Issuers’ Rules).” (READ)
At the close of the day’s trading, C&I
Leasing topped the advancers’ table, chalking 9.50% to close at N1.96 per share
on market sentiment, followed by National Salt 4.99% notch at N12.62
per share on market forces ahead of Q3 numbers. On the flipside, MRS Oil lost
4.97% to close at N30.39 on market forces/sentiments, followed by Continental
Reinsurance which shed 4.67% to close at N1.43 per unit on profit taking.
TODAY’S OUTLOOK
As the market opens this morning, expect
volatility to persist owing to portfolio repositioning ahead of earnings season
and end of the year-end continues.
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.
Get your home study pack today and ride with the current recovery on
Nigeria’s stock market and economy. By investing and trading knowledgeable
The workshop materials on Trading and Investing
for Financial Independence series are Available. Kindly call or send yes to
08032055467 or 08111811223.
Ambrose Omordion
CRO | Investdata Consulting Ltd
ambrose.o@investdataonline.com
Tel: 08028164085, 08032055467
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