Nigeria’s Stock Market Index May Soar Higher On Full-Year, Q3 Numbers

Market Update for Week Ended February 2 and Outlook for Feb 5-9

Nigeria’s equity market over the past week closed higher on impressive Q3 numbers from companies in the consumer goods sector, besides the 57.3 points January Purchasing Managers’ Index (PMI) report, making 10 months of positive data.
Last week’s gain halted the previous week’s down market, the first in 2018, resulting from a massive profit taking and panic selling.
The increased buying pressure and demand for stocks in the period under review, which ushered in the second month of the year is likely to continue in the uptrend direction, if history repeats itself as full year earnings season earnestly kicks off with early filers this month. The Q3 numbers for March accounts released last week has given insights into what should be expected from companies in that sector with December year end fiscal account.
International stock markets around the world were lower over the past week, especially the U.S markets that entered into correction wave that had been long expected as its Q4 GDP data was revised to negative. Also, impact of the tax reform is likely to fuel inflation in the midst of already high valuations in its equity market. Emerging and Fortier markets have become the toast of Hedge funds and other foreign funds as most of the equities in these markets remain relatively undervalue due to early impact of low oil price.

NSEASI Weekly Time Frame

A broad-based uptrend lifted equities at all, capitalisation classes in January, providing a healthy market rally that kicked off February on a positive note as smart money position for expected full year financials that fuel the increasing demand for stocks. There is the possibility of the index zooming past the 45,000 psychological line and continuing to build strength on expected stronger Q4 through the first quarter. Stocks are likely to benefit from this highly supportive environment, breaking out new 52 week high. Careful stock picking will be required at different sectors despite the seeming favorable market conditions during the earnings reporting season.

NSE Banking Index

NSE Banking index over the past week moved higher by 2.11% after pulling back from its five-year high to remain within the bullish channel. A breakout of the upper line of the rising channel will confirm a new trend. The possibility of correction is high before the earnings season but with the increasing buying of new position. The second tier banking stocks for the period had significant rally over the first tier banks due to low price attraction.

NSE Insurance Index

NSE Insurance Index gained 1.35% over the past week to retrace up from the recent pullback that was attributed to profit booking that had created opportunity for new entrance ahead of full year earnings season. This sector’s index had been trending down for over four year before the breakout in Apirl 2017.

NSE Consumer Goods Index

NSE Consumer Goods Index moved lower by 3.33 percent over the past week to create buy opportunity as recently released Q3 numbers from the sector revealed value and strength as the index is trading above 50 Day moving average.

NSE Industrial Goods Index

NSE Industrial goods Index moved up by 5.32 percent over the past week to outperform the market and breakout the resistance level of 2401 to usher in new uptrend rally as revealed by the above chart.

NSE Oil/Gas Index

NSE Oil/Gas index over the past week shed 0.7% to continued its sideways movement.

http://investdata.com.ng/2018/02/nigerias-stock-market-index-may-soar-higher-full-year-q3-numbers/