Profit Taking Slows Down, Volatility Lingers, Amidst Hope For Improved Economic Data

Market Update for December 12, 2017

Profit booking on the floor of the Nigerian Stock Exchange on Tuesday slowed down, while volatility continued, halting two days of bear market as highly capitalized stocks appreciated marginally in value, ahead of the release of the November inflation figure. This was just as investors continue repositioning in fundamentally sound equities of stocks with good management and corporate governance that have remained attractive to foreign and institutional investors as the year winds down. The improvement in numbers presented by consumer, industrial and banking stocks have so far supported their share prices, pointing to the possibility of higher payout in 2018.
Trading opened on the downside in the morning and rallied little at midday to hit an intraday high of 39,104.09, reducing the loss momentum and crossing into the green region from a low of 38,836.25 before pulling back to close the day at 38,924.63, which was nonetheless higher than its 38,913.99 opening level.

Market technical for the day was mixed as NSE Index resisted further decline on a huge transaction volume. Volume index for the day stood at 0.96 with selling pressure of 67% and buying volume, 33% of the total transaction to short live bear transition on a mixed sentiments.
The breakout of oil price to the current high of $65.62 per barrel on Tuesday after a major pipeline was shut, due to cracks, a situation that would further push up government’s revenue, while enhancing the nation’s foreign reserves, despite the 1.8m barrels per day production cap set by the Organisation of Petroleum Exporting Countries (OPEC).

Meanwhile, the All-Share index inched up by 10.64 basis points to close at 38,924.63, from the 39,913.99 points, representing a 0.03% growth, in the same direction, market capitalisation climbed up by N3.71bn to N13.56tr, from previous day’s N13.55tr, representing a 0.03% value gain. The upturn recorded resulted from value gain in medium and high cap stocks like Dangote Cement, Nigerian Breweries, Guaranty Trust Bank, Guinness Nigeria, FBNH, Dangote Sugar and Dangote Flour, which impacted positively on the ASI’s year-to-date returns, to 44.84%, just as YTD growth in market capitalisation fell to N4.31tr, representing a 46.61% rise over the year’s opening value.
Market breadth for the day was negative as the number of decliners outpaced advancers in the ratio of 23:21 on a relatively huge traded volume that was higher than Monday’s level.

Transactions in terms of volume and value were up by 31.97% and 444.92% respectively to 462.67m shares worth N26.81bn from previous day’s 350.6m units valued at N4.92bn. The day’s activity was driven mainly by Dangote Cement and others like FBNH, Diamond Bank, FCMB and AXA Mansard, which topped the volume chart.
Best performing price at the end of the day were UBN and Diamond Bank that topped the advancers table, gaining 10.01% and 7.14% respectively to close at N7.91 and N1.50 on positive market forces.
On the flipside, FCMB and Fidelity Bank shed 4.69% to close at N1.22 and N2.26 respectively on market forces and profit taking,

TODAY’S OUTLOOK

Being the mid-week, volatility will continue as traders take profit and reposition, while at the same time smart money continue their accumulation of shares in value stocks ahead of 2018 earnings reporting season and Santa Claus rally amidst the improving and positive economic data especially as inflation figure for November is expected before the week runs out. The positive outlook for emerging market in 2018 as a result of high commodities price is a major attraction as currencies and exchange of these developing markets are relatively stable. This is in addition to undervalued assets in these exchanges.

Again, we advise that investors allow numbers to guide their decisions while repositioning for the rest of the year’s trading activities, especially now that stock prices remain volatile 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.
Get your home study pack on INVEST 2018 Traders & Investors Summit and ride with the current recovery on Nigeria’s stock market and economy. By investing and trading knowledgeable. You can also still access stocks analysed in the home study pack of the INVEST 2018 traders & investors summit, which will be available this Friday.

Comprehensive training materials on stock Trading and Investing for Financial Independence series are Available, you can play and watch on your mobile phone, laptop, desktop and Tv. Kindly call or send yes to 08032055467, 08028164086 or 08111811223.

Ambrose Omordion
CRO | Investdata Consulting Ltd
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