MARKET UPDATE FOR WEEK ENDED OCTOBER 13 AND OUTLOOK FOR 16-20

Nigeria’s stock market over the past week had a volatile and mixed performance to close higher on an uptrend that supports buying opportunity as demand for stocks were in the increase with the earnings reporting season entering its peak, ahead of the release of September inflation and Q3 GDP data from the National Bureau of Statistics (NBS). 

The increasing buying pressure reflected on the volume traded for the period under review, which is likely to continue in this new week judging from the fact that technicals had given a buy signal for some sectors and individual stocks, especially the stocks that will beat Q3 earnings expectations. 

The improvement in market breadth in the past two weeks has strengthened the up trending ability and direction which confirms the recovery in the market on positive sentiments. 

The improved speculative activities of traders are becoming noticeable in the buying pressure that supported the recent breakout that ushered in the uptrend with profit booking at intervals may slow down the rally which would depend on earnings surprises in the financials expected from the first tier banks, consumer goods, industrial, services and agribusiness would keep the trend up in the short term.

The weekly volume index was 1.02, with buying position at 93% and 7% selling volume of the total transaction as volatility continued. The composite NSE All Share Index gained 527.24 points to close at 36,848.17points on Friday, from the week’s opening figure of 36,320.93 points, representing a 1.45% growth on a high volume of transactions. The index hit an intra-week high of 36,888.70 and low of 36,320.30 basis points. A breakout of this new resistant level at 36,888.70 will trigger another momentum that will surpass the year-to-date resistant point of 38,221.17 with expectation of strong numbers that will further boost market fundamentals that will drive prices as the year winds down with hope of impressive numbers that will impact equity prices positively. Similarly, market capitalisation for the period closed higher at N12.68tr from an opening value of N12.5tr, representing a 1.45% value gained in investors’ portfolios to reduce losses suffered recently and keep the two weeks bull transition. 

Top performing stocks that dominated the advancers log for the week were low and medium caps stocks that had pulled back before now and are now attracting attention on the strength of their strong fundamentals and technical, thereby revealing buy opportunities in these stocks ahead of their second and third quarter earnings reports. 

The upturn experienced during the period was as a result of improving speculative activities of traders and smart money willing to play the quarterly earnings reporting season that has already kicked off.  The continued repositioning in low, medium and high cap stocks, has impacted the NSEASI’s year-to-date return to 37.11%, just as market capitalisation for the period increased to N3.45tr, representing a 37.42% gain from the year’s opening value.

Market breadth remained positive as the advancers outnumbered decliners in the ratio of 41:23 on a high volume of trades which reflect that investors and traders’ are repositioning ahead of earnings. 

Stock markets across the world were mixed to close the past week higher, despite the pullback signaled in the developed market like the U.S where cautious trading and profit booking continues on the rise, regardless of the earnings reporting that had kicked off.  Many players in that market are expecting tax cuts and December rate hike to underpin future results, amidst uncertainty surrounding North Korea and other geopolitical issues that remain major concerns to investors.  

Back home, NSE’s benchmark Index opened the week on a positive note, gaining 1.41% which was short-lived on the second trading session when there was a marginal loss of 0.15%, continuing at the midweek’s session with a 0.34% slip. The trend was reversed on Thursday, as the indicators closed north with a gain of 0.22%, which was sustained on Friday, with the indicators recording a relatively higher gain of 0.32%, bringing total gained for the week to 1.45%, to continue the previous week’s up market.

Cumulatively, the week ended with the All-Share Index and sectoral indices closing higher, except for the NSE AseM which was flat to close the week, an indication that the positive sentiment that pushed prices up has touch all the represented sectors on the exchange. 

The week’s activities, measured by aggregate volume and value, were mixed as volume was up marginally by 4.70% while investors crossed 1.56bn shares as against previous week’s 1.49bn units, while  value for the period dropped by 10.66% at N13.5bn from  the previous week N15.11bn.

During the week AXA Mansard Insurance topped the advancers’ table, gaining 25.50% to close at N2.51 per share on the back of market forces and expectation of Q3 numbers with possibility of interim dividend, followed by CCNN’s 20.10% notch to close at N9.88 each on market sentiments and expectations for its Q3 numbers. The decliners’ table on the other hand was led by University Press, which closed 13.62% lower at N2.22 on market forces; while AG Leventis followed with 11.29% drop to close at N0.55 per share.

During the week also, Cutix announced it dividend payout of 18 kobo, while the full suspension placed on the shares of Thomas Wyatt and Africa Alliance Insurance were lifted up. The companies are among those suspended for failing to meet the NSE’s post-listing requirement on the submission of quarterly and full-year financials.

Market Outlook

As the market opens this week, expect volatility to persist owing to positioning, profit taking and  more earnings reports that would hit the market, expected to trigger more  speculative activities  that has kicked off  ahead of  September inflation  and Q3 GDP figure in the amidst of year-end seasonality. 

As we move into the middle of the earnings season more numbers are likely to be released but 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. 

Investing in the stock market is in phases. You must know this in order to manage your trading and investment 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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