MARKET UPDATE FOR NOVEMBER 7, 2017

The nation’s equity market had a mixed session on Tuesday to continue its volatility, reversing previous down session as investors reposition on the strength of earnings power, news and expectations continue to attract attention to interim dividends declared recently. Those also under the radar of investors and traders include low price stocks, undervalued equities with strong earnings that are trending up, as well as those with strong potentials as the economy and market fundamentals inspire hope for a brighter tomorrow.

The trading session opened with marginal gain in the morning, oscillating in the mid-morning to afternoon, touching intraday high of 37,063.04 to breakout the 37,000 resistance level from the day low of 36,907.07 after which it finally closed the day higher. The underlying technicals were good and positive, particularly on the NSE All-Share index, NSE Banking and NSE Industrial good, which were trading above their 20-Day moving average, MACD was positive, money flow index looking up and RSI above 50 at 63. 

As hinted in our update yesterday, the market broke out, but with weak momentum, following which mid-week’s market sentiment and forces will give real direction as trending ability remain weak since ADX is below 20 at 13.38.

The presentation of 2018 budget of consolidation should be a plus for the market if only the government will change its style of implementation and disbursement of funds to hasten the execution process so that these infrastructural developments will drive the economy and positively impact the life of the people. We would not however feign ignorance of the fact that government has consistently under-performed in terms of its revenue projections, since the need to further plug leakages and check wastage, while concentrating on projects with value-adding propositions in terms of generating employment directly and indirectly, and driving economic growth and development.

We would not however fail to place on record also the fact that the budget for the current fiscal year, as well as the one before it did not, to a greater extent, successfully reflect in the life and well-being of ordinary Nigerians across the length and breadth of the country. It is true that the emerging economic data are good, showing improvements, just as the corporate earnings, yet there is serious poverty  and suffering in the land, threats here and there. The government with progress made so far should review its reforms policies, implementation style, its personal that are managing the economy, so that this budget of hope again should boost the recovery and touch the life of the people through speedy execution of projects.

The bull sentiments return yesterday as revealed by buying pressure of 68%, on a volume index of 1.09 and selling position was 32% of total transaction, to reverse Monday bear session.

Meanwhile, the All-Share index gained 82.74 basis points to close at 37,013.57 from 36,930.83 points, which represented a 0.22% growth, in the same direction  as market capitalisation that was up  by N28.64 billion to N12.81 trillion representing 0.22% value gain from previous session’s N12.78 trillion.

Price appreciation  recorded  by medium and high cap stocks like Dangote Sugar, FBNH, Dangote Cement, Zenith Bank, Guaranty Trust Bank, Total Nigeria, UBA and Guinness Nigeria   which impacted positively on the ASI’s year-to-date return, to 37.73%, just as market capitalisation growth YTD stood at N3.56 trillion, representing a 38.54% rise above the year’s opening value.

Market breadth for the day remain positive as the number of advancers outpaced  decliners in the ratio of 23:17 on a high traded volume that was lower than previous day’s level to halt bear.

Market transaction, in terms of volume and value were mixed as volume was down by 34.59% to 305.17 million share from Friday 466.52 million units, while value appreciated marginally by 0.09% to N2.91 billion from the previous day value of N2.90 billion.

Activities in the shares of Diamond Bank, Fidelity Bank, Cadbury, FBNH and Meyer topped the volume chart.

At the end of the day trading session, Diamond Bank topped the advancers’ table, gaining 5.17%, to close at N1.22 per share, on the back of plans to divest its West African subsidiaries, thereby positively impacting its book. It was followed by University Press, which notched 4.80%, to close at N2.84 on market forces and improvement in its Q2 numbers.

On the flipside, International Breweries, shed 9.29% to close at N41 on profit taking; followed by Linkage Assurance 5% loss, to close at N0.76 per unit on profit taking.

TODAY’S OUTLOOK

As the market closed on a good technicals yesterday, we expect volatility to continue on the strength of  portfolio rebalancing, profit taking and repositioning in the earnings power, market news and expectations ahead of economic data and year end changes as crude oil hit its 2 and half years highs to close at $60.  

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 moving up and down amidst improving company, economic and market fundamentals.

It is time to combine fundamentals and technical tools to take decision by knowing the support and resistant level to reposition or exit any position. Market is in phases know the cycles in order to manage your trading and investing risk. For stocks that should be on your shopping list to buy in this seasonality changes as the year winds down, sign up to INVESTDATA BUY AND SELL signal setup by calling 08032055467.

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Ambrose Omordion
CRO | Investdata Consulting Ltd
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