YEAR-END OUTLOOK: VOLATILITY, PROFIT TAKING, AS INVESTORS REALIGN PORTFOLIOS
MARKET UPDATE FOR WEEK ENDED NOVEMBER 24
AND OUTLOOK FOR NOV 27-DEC 1
Nigeria’s stock exchange over the past
week continued on its volatility path, even as it reversed previous week’s down
market on the strength of investors and traders taking advantage of last week’s
Monetary Policy Committee (MPC) meeting outcome, which induced a pullback. It
was not just the outcome of the MPC meeting alone, as investors and traders
interpreted it along with other positive economic data such as the Q3 GDP and
inflation data, as well as the Purchasing Managers’ Index to position in
fundamentally sound equities, especially blue-chip
stocks like Dangote Cement, which recently expanded its foot-hold on the
continent, with the opening of its latest plant in Congo Democratic Republic;
and Nestle Nigeria that continues to bask on the robust market disposition,
helped by the juicy interim dividend of
N15per share, just as its improved earnings capacity remains a support base for
its price and dividend to hit a new all-time high.
The market during the week recorded a mixed performance,closing higher
on strong technicals and good buying pressure that reflect demand for stocks, hit tinga
recent resistance level on a weekly high of 37,374.88 after breaking out the
psychological line of 37,000 point again from the low of 36,563.48basis points.
At the same time, the index formed a symmetrical triangle chart pattern that supports
continuation or reversal of current trend with end of month and year round the
corner.Market breadth was positive as volume index for the period stood at 1.29,
with buying pressure of 99% and 1% selling position of the total transaction,
amidst repositioning on the part of traders after Moody’s downgrade of both the
sovereign and banking stocks; coming after the reclassification of most
Nigerian stocks on the MSCI Frontier Index, and the decision of the MPC to hold
its benchmark Monetary Policy Rate (MPR) at 14%, while retaining others on the
argument that the recent improvements in the GDP remains fragile, when
considered against the nation’s population growth rate.
Investdata Research maintains its long held opinion that there is need
for a holistic approach to quickening the growth of Nigeria’s economy, which
must involve the monetary and fiscal authorities to boost productivity,
achieve and sustain meaningful growth.
The composite NSEAll-Share index for the
week gained 662.33points to close at 37,365.91 points, from an opening figure
of 36,703.58 points, representing a 1.80% growth on a higher volume of
transactions that were driven by financial services and consumer goods.
Market capitalisation for the period
closed higher at N13.01trfrom the opening value of N12.77tr, representing a 1.84%
value gained in investor portfolios, with low and medium cap stocks dominating
the advancers’ log as a result of their high upside potentials and low price
attraction, considering impressive numbers of quoted companies.
The upturn recorded for the period were
due to price appreciation in the low, medium and high stocks that impacted positively on the NSEASI’s year-to-date
return to 39.04%, just as market capitalisation for the period increased to
N3.76tr, representing a 40.69% gain from the year’s opening value.
Market breadth for the week was positive
with advancers’ outnumbering decliners in the ratio of 36:24 on a high volume
of trades that is marginally lower than previous week’s.
It was a big and mixed week for markets around the world as U.S equities rose
on investors expected increase in shopping activities as households celebrated Black
Friday, whereas in Europe markets closed lower on the lingering political
uncertainty and lower liquidity levels due to the thanksgiving holiday. Asia
markets were mixed to close the period as investors look to position with
Chinese stocks,ahead of the November 30thmeeting of the Organisation
of Petroleum Exporting Countries (OPEC) to determine whether to sustain the
supply level, or further cut output that would further drive oil prices higher,
with oil price hitting $64 to close on Friday at $63.7 from the previous day
$63.4.
Trading on the NSE for the week started on
a positive note as the market reacted to the better-than-expected Q3 GDP growth
of 1.4% released same day to consolidate the previous trading session’s up
market by gaining 0.24%. This was short-lived as the loss in Tuesday’s trading
session wiped out the previous gains, as the index shed 0.52%, after which midweek’s
trading session closed by a marginal 0.02% gain to signal an uptrend that was
sustained on Thursday, just the following day with the index gaining 0.22% and
1.85% respectively to close the week higher than its opening with 1.80%
gain.
The All Share Index and sectoral indices
closed higher for the period, except for the NSE Oil/Gas that was lower by
1.45% while NSE ASeM closed flat for the week.
Market transaction for the week in terms of
volume and value were down by 22.14% and 58.38% respectively at 2.18bnshares
worth N22.8bn, from the previous week’s 2.8bn units valued at N54.78bn.
The best performing stock for the period
was Dangote Sugar, which hit a new 52-week high, after gaining20.31% to close
at N17.24,while Linkage Assurance recorded a rebound after the previous week’s
sell-off to close at N0.64, gaining 14.29% to top the advancers table on the strength
of low price attraction and market forces.
The worst performing equity for the
period was Forte Oil which lost 17.73%, closing at N40.00 on market reaction to
its exit from the MSCI frontier Market index and profit booking, while GSK followed with a 9.70%
drop to close at N22.80per share on profit taking and its unimpressive Q3
numbers.
During the week also, Lafarge Africa
listed additional shares of 85,261,220 units as a result of its capital re-organisation
with Ashaka Cement; while FCMB and Nigerian Enamelware released their Q3 and Q2
earnings reports respectively.
This week, expect a continuation of the volatility, being the lasttrading week for the month of November and the mark down of Nestle Nigeria for the N15 dividend, listing of Global Spectrum shares on the exchange and OPEC meeting, amidst portfolio reshuffling as seasonal changes influence stock prices amidst the volley of positive economic data. Expect traders to also take advantage of volatility and strong Q3 numbers for repositioning, profit taking and rebalancing their positions. There is also the effect of the reshuffling of stocks on the MSCI Frontier Index at this time.
But one thing that is clear in the current market situation is: 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 oscillating 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.
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