MARKET UPDATE FOR JANUARY 2, 2018
SUSTAINED VOLATILITY
AS INVESTORS TAKE PROFIT, REPOSITION FOR EARNINGS SEASON
The first trading session of 2018 was highly volatile,
closing positive after opening with sharp gap down that lasted till midday, recording
almost 549 basis points’ decline before it rallied back by the afternoon on the
strength of price appreciation of some stocks, as traders and investors began taking
position ahead of early filer reports likely to hit the market this month. This
was especially the case for companies billed to file their third quarter earnings
for March year end accounts, while December full-year accounts are underway,
especially from Forte Oil, Nigerian Breweries, United Capital and Nestle, which
results are expected to be in the market latest in February, given that their
accounts do not require approval by a primary regulator like the banks and
their insurance cousins.
The January effects may not be much this year as market
structure had changed with more foreign investors playing the market heavily,
controlling over 62% of transactions, leaving the remaining for Pension Fund Administrators
and domestic institutional players, while retail investors are seemingly left
with the crumbs and having minimal impact to affect the market’s direction. The
sale of their shares to meet personal financial obligations, including school
fees and house rent at this time of the New Year would therefore have minimal
effects, following which the positive disposition of the market is likely to be
sustain on a continued volatility in expectation of quarterly and full year
scorecards for listed companies.
Market technicals for the day was mixed
as market breadth was positive on a decline volume that signal accumulation of
smart money in the market after a downside in the morning and rallied back
above the opening figure to touch intraday highs of 38,264.7 from lows of
37,678.34 but retraced back above 38,000 psychological line to keep the
positive uptrend momentum.
The continued appreciation of the Naira
and oil price remaining above $60 per
barrel on Tuesday in the international
market, well above the 2018 budget benchmark of $45pb, meaning there is already
surplus to fast-track some projects that will boost the recovery and growth
recorded so far.This is a plus 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 Nigerian
Stock Exchange’s All-Share index inched up by 21.60 basis points to close at
38,264.79, from the 38,243.09 points, representing a 0.06% growth, just as market
capitalisation moved in the same direction, climbing up by N7.69bn to close at
N13.7tr, from previous day’s N13.69tr, representing a 0.06% value growth. The
upturn recorded resulted from appreciation in the prices of stocks such as: Nigerian
Breweries, PZ, UBA, Dangote Sugar, Zenith Bank, Access Bank, CAP, Fidelity Bank
Fidson, Nascon, International Brewery and Honeywell Flour Mills. These impacted
positively on the ASI’s year-to-date returns, to 0.06%, just as Year-to-Date
growth in market capitalisation stood at N7.69bn, representing a 0.06% rise over
the year’s opening value.
Market breadth
for the day was positive as the number of advancers outpaced decliners in the
ratio of 27:13 on a relatively low traded volume that was lower than last
trading day of 2017 level.
Transactions in
terms of volume and value were down by 55.72% and 74.12% respectively to 248m
shares worth N1.74bn from previous day’s 561m units valued at N6.89 billion.
The day’s activity was driven mainly by shares of Transnational Corporation of
Nigeria (Transcorp), Zenith Bank, Skye Bank, FCMB and Access Bank, which topped
the volume chart.
Biggest gainers
for the day were FCMB and Chemical & Allied Products which topped the
advancers table, chalking 6.76% and 5% respectively to close at N1.58 and N35.70
on positive market forces.
On the
flipside, NEM Insurance and Ecobank Transnational Incorporated shed 4.82% and
4.29% to close at N1.56 and N16.27 respectively on profit taking activities of
investors.
TODAY’S
OUTLOOK
Being the mid-week and second trading day of
2018, expect volatility to continue on Wednesday as traders take profit and
reposition for the weeks and months ahead. Meanwhile, smart money could continue
their accumulation of shares in value stocks ahead of the 2018 earnings
reporting season. The positive outlook for emerging market in the New Year 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.
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
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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