PROFIT TAKING SPIKES PANIC SELLING, EVEN AS MARKET FUNDAMENTALS REMAIN UNCHANGED
MARKET UPDATE FOR DECEMBER 14, 2017
It was a difficult trading session on the
Nigeria Stock Exchange on Thursday, as market indicators declined further on a
highly volatile mode to consolidate the losing streak that almost wiped out all
of the gains recorded month-to-date, due to massive profit taking in blue chip
stocks that almost triggered panic among retail investors. Considering what the
market had done in terms of performance year-to-date especially, profit taking
is not unexpected also given that it is an integral aspect of stock trading and
investing.
Trading activities for the day started
out with a little pop to the downside, reaching intraday lows of 37.840.14,
breaking down the psychological line of 38,000 and strong support level of
38,241.45 from the day’s high of 38,539.91 on below recently traded market
average volume. The index had actually
formed bear wedge, despite reducing the losing streak to close the day at
37,933.70 which was also lower than the day’s opening figure.
As the corrective wave 4 extended to
breakdown the former resistance level that had turned strong support, expect a
reversal at 37,374.88 if the index does not hold at 37,709.20 to usher in wave
5 extension that will be supported with the positive earnings reporting season
sentiments in the New Year.
Yes, institutional money flow index is
looking down to show that money is leaving the market which is as a result of
profit taking, investors should not activate their panic mode just yet, since
there is no negative news in the market. The banks for some time now have been
carrying these high level of Non-Performing Loans (NPL) and prices had rallied,
dividend had always been paid, which supported the sector’s above 70% return
year-to-date, even as some of these banking stocks are still undervalued.
Technically, the market’s traded volume
was low, while at the same time selling pressure adjusted down from the
previous day’s 95% to 87%, with volume
index of 0.60 and buying volume of 13% of the total transaction to continue the
bear run. Many indicators are signaling a sell market as revealed by market
breadth for the day. The possibility of reversal at this point is high as
traders and investors take advantage of the pullback to position for dividend
in 2018.
Meanwhile, the
All Share Index shed all of 600.94 basis points to close at 37,933.70, from the
opening 38,534.64 points, representing a 1.56% decline, while market capitalisation
was up by N76.92bn as a result of the 5.3bn additional shares added to those
outstanding for International Brewery due to its recently concluded merger
scheme involving International Brewery, Intafact Beverages and Pabod Breweries
Ltd. This raised market capitalization to N13.5tr, from previous day’s N13.42tr,
representing a 0.57% increase. The continued downturn was attributed to losses suffered
by
all classes of stocks like Dangote Sugar, Dangote Flour, Lafarge Africa,
Dangote Cement, NB, ETI, UBA, Access Bank, UBN, Zenith Bank, FBNH, Presco and
Guinness Nigeria .
This in turn impacted
negatively on the year-to-date return of the All-Share index, reducing it to
41.15%, just as YTD growth in market capitalisation stood at N4.25 trillion,
representing a growth of 45.97% above the year’s opening value.
Market breadth
was negative as the number of decliners widened, outpacing advancers in the
ratio of 32:10 on a low traded volume that was lower than the mid-week
level.
Activities in
terms of volume and value were mixed as volume dropped by 10.698% to 289.3m units
from previous day’s 323.95m shares, while value was up 41.43% from N4.4bn in
the previous day to N6.22bn. Transactions was dominated by banking stocks again
as FBNH, FCMB, Zenith Bank, Fidelity Bank and Diamond Bank topped the volume
chart.
At the end of
the day’s trading Seplat and Caverton topped the advancer’s log, gaining 7.73%
and 3.97% respectively to close at N540.05 and N1.37 on positive market sentiments.
On the other hand, Flourmills and UBN shed 9.71% and 5.00% to close at N30.47
and N7.60 respectively on market forces and profit taking,
TODAY’S
OUTLOOK
The ongoing volatility will continue being the
last trading day of the week that will usher in the last full trading of the
year as traders take profit and seek
information to reposition, especially as inflation figure for November is
expected before the week runs out and full year earnings season approaches. The
positive outlook for emerging market in 2018 as a result of high commodity
prices is a major attraction as currencies of these developing markets remain
relatively stable. It begins to make much more sense for investors when you add
the undervalued nature of assets on these exchanges. November inflation figure
is expected to hit the market today.
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
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Ambrose
Omordion
CRO | Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467
CRO | Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467
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