Institutional Money Flow Clouds Profit Taking Activities, Sustains Nigeria’s Equity Rally

Market Update for January 11

Prices of equities on the Nigerian Stock Exchange (NSE) continued to gallop on Thursday, following which the composite All-Share index marginally broke out its four-year resistance level to new highs on intraday movement amidst volatility that remained strong on huge demand for stocks by the investing public. This revealed sustained inflow of funds into the market as investors increased the rate of their position taking despite continued profit booking.

The continuation or fizzling out of this current volatility and up trending would be a function of market forces at Friday’s trading, being the last session for the week which has been a sell market over a period of time. The inflow of funds in the first month of the year and change in the holding structure of the market has almost wipe off the January effects so far in 2018.
It was a big explosive in opening on Thursday’s trading which lasted through the mid-morning to afternoon, before a pull-back after hitting intraday high of 43,269.41 from its low of 41,813.37 which was a consolidation of the bull rally. The market tested a resistance level and penetrated up before it came down slightly to end the day strong as blue chip stocks broke-out their 52 weeks highs.
Market technicality for the day was strong and positive with institutional money flow index looking up but slightly slow, despite the huge volume as buying pressure stood at 84%, while selling volume was 16%. Volume index of the day’s total transactions was 1.95 points, just as market breadth also remained positive and strong to close the day.

All Share index gained 1,230.38 points to close at 43,041.54 after opening at 41,816.11, representing a growth of 2.93% on huge traded volume that was higher than previous levels. Similarly, market capitalisation for the day was up by N436.1bn, closing at N15.32tr, from an opening value of N14.88tr which also represented 2.93% value gain in the portfolios of market player.

The continued upturn was due to appreciation recorded by low, medium and high cap stocks that impacted positively on the NSE’s Year-to-Date returns, pushing it to 12.55%, just as market capitalisation grabbed N1.71tr year-to-date, representing 12.55% growth from its opening value.
The NSE benchmark and sectorial indices were in green, except for NSE AseM that remains unchanged. Market breadth for day was positive and stronger as the advancers to outpaced decliners in the ratio of 56:10, continuing its six-day bullish transition.

Market activities in volume and value terms for the day were up by 6.75% and 30.67% respectively as investors crossed 1.16bn shares worth N17.37bn, compared to previous day’s 1.09bn units valued at N13.3bn. Transaction volume for the day was significantly boosted by transactions in financial services and conglomerate sectors, as trading was heavy in Transcorp, Diamond Bank, Zenith Bank, FBNH and Access Bank that topped the activity chart as most traded stocks by volume.
Honeywell Flour and CCNN topped the day advancers’ table, gaining 9.97% and 9.96% respectively to close at N3.20 and N12.03 each. The gains were propelled by the ongoing bull-run and expectation earnings reports, while University Press and Meyer led the decliners’ table after shedding 4.71% and 4.48% to close at N2.63 and N0.64 respectively, resulting from profit taking and market forces.

TODAY OUTLOOK

Being the last trading of the week expect mixed performance as volatility and profit taking will continue irrespective of 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. The above NSE Daily MACD Chart revealed a bullish crossover that is still indicative of an up market. MACD Signal line crossovers tends to work well with volatile market or stocks that trend often. A bullish crossover occurs when the MACD turns up and crosses above the signal line, while a bearish crossover occurs when the MACD turns down and crosses below the signal line. Once the crossover occurs, you want to make sure both lines gain as much distance apart from each other as possible. This is a good sign that momentum is continuing in the desired direction.
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
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