AS BULL-RUN CONTINUES, IT’S CAUTION AHEAD REPOSITIONING FOR EARNINGS SEASON

Trading on the Nigerian Stock Exchange had a positive finishing on Tuesday as equity prices continued to gallop amidst strong volatility to breakout the psychological line of 40,000 basis points in preparation to hit a new four-year highs on a huge transaction volume. This consolidated the fifth session of 2018 in a row of gains that kicked off the new year’s trading sessions. The technicals for the day remained strong and positive as institutional money index keeps looking up.

The day started out with the composite index inching up slightly in the morning, then oscillating in the mid-morning before rallying up to test intra-day high of 40,485.54, from lows of 39,688.04. The breakout of 40,000 mark was successful to close the day at 40,362.97.
Tuesday’s equity buying pressure stood at 85%, while selling volume was 15% with volume index of 1.43 points of the day total transaction.

As earnings season kicks off this week with Vitafoam releasing it full-year scorecard for 2017 financial year, more Q3 numbers are expected to hit the market in the weeks ahead. Also, most of the big names that report their earnings in February and March will give more momentum to the market as we get into the peak of the full-year reporting period in the last two weeks of March. For a more detailed rundown of the earnings schedule for the upcoming season. Visit our website next week.

The increasing inflow of funds into the economy and market had reflected in the rise of Foreign portfolio inflows of $3.32 billion as a result of the ease of payment, as well as the improving economic fundamentals that has so far reflected in the positive macro-economic data and Nigeria’s rising external reserves, oil production output and oil prices which has further boosted expectation of growth in the economy in 2018. Also these had kept the nation currency appreciating against major global currencies.

This is just as the World Bank in its January 2018 Global Economic Prospect report launched on Tuesday in Washington DC forecasts that Nigeria’s economy could grow by to at least 2.5% this year on the back of improved commodity prices, investments and trade flows, while growth in Sub-Saharan Africa is forecast at 3.1%. Also, Nigeria’s Gross Domestic Product (GDP) is expected to grow by 2.8% come 2019 and 2020.

According to the bank, growth in Sub-Saharan Africa is projected to continue to rise to 3.2 per cent in 2018 and to 3.5 per cent in 2019, on the back of firming commodity prices and gradually strengthening domestic demand.
Meanwhile, the NSE’s benchmark index gained 513.32 points to close at 40,362.97, after opening at 39,849.65, representing a growth of 1.29% on huge traded volume that was higher than previous levels. Similarly, market capitalisation for the day was up N329.67bn to close at N14.36tr, from an opening value of N14.18tr, which also represented 1.29% value gained in investors’ portfolios.

The upturn recorded was boosted by price appreciation across all equity classes that impacted the NSE’s Year-to-Date returns, pushing it to 5.54%, just as market capitalisation for the same period had accumulated N754.36bn year-to-date, representing 5.54% growth from its opening value.
The composite index and other sectorial indices closed higher, except for, NSE Consumer and NSE Lotus that were lower while NSE AseM was flat.

Market breadth for day remained positive and stronger as the number of advancers surpassed decliners in the ratio of 47:7, continuing its four-day bull run in a row.
Market activity in volume and value terms for the day were mixed as volume was up by 27.52% to 770.87m shares from 604.53m units recorded on Monday, while value declined by 51.19% to N7.89bn, from N16.17bn. Transaction value for the day got a significant boost from transactions in financial services and conglomerate sector, as trading was heavy in Diamond Bank, FCMB Zenith Bank, Access Bank and Transcorp which topped the activity chart as most traded stocks by volume.

Best performing stocks for the day were , Dangote Flour and FCMB, which topped the advancers’ table, grabbing 10.00% and 9.05% respectively to close at N16.17 and N2.17 each. The gains were propelled by market forces and expectation of full year earnings reports, while UACN Property and Nahco led the decliners table after shedding 4.72% and 4.67% apiece to close at N3.03 and N4.29 respectively, resulting purely from profit taking activities.

TODAY OUTLOOK

The ongoing volatility will continue this morning as profit booking is underway amidst repositioning for earnings reporting season as quarterly and full year score-cards of companies are expected to be in the market any moment from now.
However, we would like to reiterate that investors should go for value equities, especially during this season that dividend payment is approaching.

We advise investors to allow numbers 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 includes 15 stocks picks for 2018 are available now to guide your positioning as trading for the year just started.
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
info@investdataonline.com
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http://investdata.com.ng/2018/01/bull-run-continues-caution-ahead-repositioning-earnings-season/