Expect Continued Repositioning, As Profit Taking Wanes Amid More Earnings Surprises

Market Update for March 15, 2018

Nigeria’s stock market on Thursday had another weak trading session that was highly volatile, pulling back below its shortest moving averages of 20 and 50 to touch the lower band of the Bollinger, near the recent strong support level of 41,883.82 basis points. A breakdown of this level may lead the market to 37,795.62bp, but with the earnings season midstream, just as the torrent of positive economic data like the February inflation data that stood at 14.33% from 15.3% in the prior month, resulting in 13 straight months of decline. This continues to reflect the impact of the Central Bank of Nigeria (CBN) continued intervention in the foreign exchange market, which had supported the relatively stable exchange rate, besides boosting the ongoing economic recovery and company fundamentals. These and the sentiment induced low price regime in the market are expected to attract bargain hunters at this point and in the process support a market rebound as more scorecards are expected in the coming days and ahead of the March 31, deadline for submission of audited results for those with December 2017 year end.
The day started out with a little pop to the upside, before a pullback to support which could not get through, and then it rolled over to nominal lows on the NSE Index, but the NSE Consumer goods did not confirm. The indexes rolled back down in what looks like wedges, or some sort of consolidation.

The weak state of the market is gradually triggering another correction mode after an attempt to recover from the February global markets induces shakeout as a result of lack of a monetary policy and unclear fiscal direction on the back of huge borrowings. This case is made worse by the fact that the 2018 budget continues to lie with the National Assembly, amidst an ongoing blame game between the presidency and the National Assembly over who is responsible for the delayed passage by the federal legislators.
These have no doubt slowed down the inflow of funds into the nation’s market and economy. The dwindling liquidity is influencing the market negatively despite the impressive earnings and high dividend payout at the ongoing earnings reporting season, which the market has repeatedly turned a blind eye to.

Technically, the market’s buying pressure of 17% on a low volume traded, is signaling distribution phase, while selling position was 83%. Volume index was 0.57 with money flow index energy weakened at 47.62 point from the previous day’s level of 53.03 points.
Meanwhile, the All Share index shed 654.11 points to close at 42,185.38bp after opening at 42,839.49 basis points, representing a decline of 1.53% on low traded volume that is higher than the previous day’s. Similarly, market capitalisation for the day lost N234bn to close at N15.09tr from an opening value of N15.21tr which also represented 1.53% value loss in investors’ portfolios.

The downturn was due to negative investors sentiment that affected the share price of blue chip stocks, despite positive and high dividend payout. This impacted negatively on the NSE’s Year-To-Date returns, cutting it to 10.21%, just as market capitalisation gains for the period improved to N1.62 trillion, representing 11.76% YTD growth.
The composite index NSEASI and other sectorial indexes were lower, except for the NSE Consumer index that closed higher for the day due to price appreciation in Nestle and Dangote Sugar. Market breadth remained negative as decliners outnumbered advancers in the ratio of 39:15.
Market activities were mixed as volume was up by 8.34% to 404.66m against the previous day 373.52m, while value was down by 11.94% to N6.03bn from the previous day N6.85bn.

Transaction volume for the day was boosted by financial services stocks like Zenith Bank, FBNH, Regency Insurance, Fidelity Bank and UBA which witnessed increased trading to top the activity chart.
NPF Microfinance and JohnHolt were the top performing stocks with 9.78% and 4.00% gain respectively to close at N2.02 and N0.53 on market sentiments, while Fidelity Bank and Japual Oil were the worst performers, shedding 9.23% and 8.75% to close at N2.55 and N0.73 respectively on market forces and profit booking respectively.

Market Outlook

We expect the negative sentiment to change as more scorecards hit the market today and next week. We do expect this current situation to linger in a recovery economy with stronger corporate earnings, positive economic data and transparent market that is technology driven.
Also, expect repositioning to continue, while profit taking will reduce on the strength of expected payouts and earnings surprises.
However, we would like to reiterate that investors should not panic but go for equities with intrinsic value, especially during this season when dividend payment is ongoing.

We advise investors to allow numbers guide their decisions while repositioning for 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. A stock market is in cycles. You must know the cycle it, or particular stocks therein are to successfully manage your trading and investment risk. For stocks that should be on your shopping list to buy in these seasonal changes as the year unfolds, sign up to INVESTDATA BUY AND SELL signal setup by calling 08032055467.

Get your home study pack of the INVEST 2018 Traders & Investors Summit and ride with the current recovery on Nigeria’s stock market and economy, thereby ensuring that you invest and trade with knowledge. You can also access stocks analysed in the home study pack of the INVEST 2018 traders and the investors’ summit held on February 24, 2018, including the 15 stock-picks for 2018 are available now to guide your positioning as trading for the year.

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 set. Kindly call or send yes to 08032055467, 08028164086 or 08111811223.
Meanwhile, the Investdata equity trading and investment education, comes up in Port Harcount tomorrow, this edition is tagged: “Power of Earnings Season For Profitable Trading and Investing” we would be simplifying stock market investing is billed for Saturday, March 17, 2018 at Emerald Hotel Limited, Rumuola. For more details call 08032055467, 08028164086 or 08111811223

Ambrose Omordion
CRO | Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467
http://investdata.com.ng/2018/03/expect-continued-repositioning-profit-taking-wanes-amid-earnings-surprises/#more