INDICATORS SOAR FURTHER, AS INVESTORS POSITION IN SAFE BETS AHEAD OF EARNINGS SEASON

The nation’s equity market rally extended its momentum on Monday to breakout 52 week resistance level of 39,656.53 basis points, hitting a new four-year high, recording the highest gain so far in the 2018 trading session, setting new intraday highs of 39,851.45 from a low of 38,908.12 on strong positive sentiments and buying pressure to continue its volatility. The market closed positively after consolidating the morning’s big early run-up, which the index consolidated pretty much most of the day as higher cap stocks recorded gains. It was however during the afternoon session it chalked most of the boom to start off the week on a strong note.

Monday’s volatile trading session closed higher to consolidate the three straight days of bull-run on the strength of heavy accumulation of positions in all classes of stocks, whether low, medium or high caps which appreciated to boost the positive market breadth ahead of the upcoming major earnings reporting season. The season kicked off already with vitafoam presenting its full-year earnings report for the period ended September 30, 2017, with the directors proposing a 15 dividend, despite the company’s negative account that had been on for two years (READ MORE).

Market technicals for the day remained positive and strong on the back of dwindling investor interest in Treasury Bills and other money market instruments, supporting the circular flow of funds as institutional money flow index of the market continues to look up, indicating that funds are entering the market. Monday’s equity buying pressure stood at 100%, while selling volume was 0% with volume index of 1.16 points, of the day total transaction.

Nigeria’s external reserves hit $40.4bn on Monday (READ MORE), helped by the rise in oil price to $70 per barrel at the international market, which is a plus for the nation’s market and economic recovery, even as the efforts of the Central Bank of Nigeria (CBN) at ensuring stability of the Naira continues to bear fruit. This huge forex reserve, the highest since 2014, is also despite the CBN’s sustained intervention in the Investors and Exporters’ Window of the inter-bank market which had made the FX market more stable and liquid, attracting inflows to support economic growth and development.

Meanwhile, the All-Share index gained 926.39 points to close at 39,849.65, after opening at 38,923.26, representing a growth of 2.38% on huge traded volume that was lower than Friday’s level. Similarly, market capitalisation for the day was up N327.67bn to close at N14.18 trillion, from an opening value of N13.85tr, which also represented 2.38% appreciation in investors’ portfolios.
The gains recorded in low, medium and high cap stocks like Mobil, Dangote Flour, PZ, Dangote Cement, FBNH, Forte Oil, Zenith Bank, Unilever, UBA, GTBank, NB and Access Bank impacted the NSE’s Year-to-Date returns, pushing it to 4.20%, just as market capitalisation for the same period had accumulated N556.54bn, representing 4.20% growth from its opening value.

The composite index and other sectorial indices closed higher, except for NSE AseM that closed lower.
Market breadth for day remained positive and stronger as the number of advancers outnumbered decliners in the ratio of 37:9, continuing its third-day of up market.

Market activity in volume and value for the day were mixed as volume was down by 19.75% to 604.53m shares from 758.31m units recorded on Friday, while value climbed by 46.65% to N16.17bn, from N11.02bn. Transaction value for the day got a significant boost from transactions in financial services, conglomerate and consumer goods stocks, as trading was heaviest in shares of Transnational Corporation of Nigeria, Nigerian Breweries, Diamond Bank, FCMB and FBNH which topped the activity chart as most traded stocks by volume.

At the end of trading, Conoil and Unity Bank topped the advancers’ table grabbing 10.24% and 9.68% respectively to close at N32.40 and N0.68 each; propelled by market forces, while Vitafoam and C& I Leasing led the decliners table after shedding 4.92% and 4.9% apiece to close at N3.09 and N1.36 respectively. Vitafoam was on profit taking following its unimpressive full-year result that hit the market on Monday.

TODAY OUTLOOK

With the earnings reporting season kicking off with the result by Vitafoam, expect volatility to continue as profit booking amidst the ongoing rally is imminent as stocks are breaking out their resistance levels, while repositioning for earnings reporting season will also continue 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.

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Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
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