Low Valuations, Expected Economic Data Spur Demand For Nigerian Equities

Nigeria’s stock market on Tuesday witnessed increased demand for stocks ahead of Q1 numbers resulted from the prevailing low valuations that had attracted foreign and local investors to trade huge volume in banking stocks. They were lured, as Investdata has continuously noted in the past, by the high margin of safety based on the intrinsic value of listed equities on the exchange, at a time Money flow index dropped to 32.79 points from previous day’s 44.78 points. This is an indication that funds are leaving the market.
It was a very volatile session, but huge rally that started with a gap down as trading opened, a situation that lingered till midday before the market reversed on the back of heavy volume. There was stronger positive sentiment that pushed intraday highs to 40,862.01 by the afternoon from lows of 40,409.90, before closing at 40,788.68 in the last five minutes of trading.

This was also helped by money market rate and bond yield that remain south ahead of the expected easing of the benchmark Monetary Policy Rate (MPR) when the Monetary Policy Committee (MPC) meets in the nearest future. Before then, stock prices are likely to head north, especially as the market expects inflow of earnings surprises from the Q1 scorecards that have started trickling in. The numbers are expected to further test the positive economic data emanating and anticipated from the National Bureau of Statistics (NBS) and Central Bank of Nigeria (CBN).
Market technicals for the day were positive and strong as volume traded was high on a strong buying pressure, positive market breadth and improved sentiment with buying position of 84%, while selling volume was 16% on a volume index of 3.52 of the day’s total transaction.

Index and Market Cap
The composite All-Share Index gained 255.31 points to halt previous day’s down market, closing at 40.788.68 basis points after opening at 40, 533.37bp, representing a 0.63% growth on a huge volume that was higher than the previous day’s. Similarly, market capitalisation for the day rose by N92.22bn to close at N14.73tr, from N14.64tr, also representing 0.63% value appreciation to reduce the losing position of investors.
The upturn recorded was attributed to price rally in low, medium and high cap stocks which impacted positively on the NSE’s Year-to-Date returns, which stood at 6.66%, just as market capitalisation gains for the period stood at N1.07tr, representing 8.12% returns from the year’s opening value.

Bullish Sectoral Indices
Sectoral indices were bullish, except for the NSE Insurance index that closed red. The Banking, Industrial, Consumer and Oil/Gas were up, due to price appreciation in Zenith Bank, UBA, Seplat, Oando, Nestle, Nigerian Breweries and Lafarge Afrca.
Market breadth for the day was remained positive as advancers outnumbered decliners in the ratio of 33:18 to halt Monday’s down market.
Market activities were up in volume and value by 732.4% and 248.9% respectively to 1.6bn shares worth N10.91bn, from the previous day’s 192.5m units valued at N3.13bn.

Transaction volume was boosted by financial services and oil stocks like FCMB, UBA, Zenith Bank, Access Bank and Japaul Oil, which witnessed increased trading to top the activity chart.
Unity Bank and Oando were the best performers for the session, topping the advancers’ table after gaining 9.5% and 9.2% respectively to close at N1.27 and N8.28 each. This was due to market forces and sentiments, as investors positioned in the stocks in hope of their earnings release.
On the flip side, C&I Leasing and Fidson Healthcare were the worst performing, after losing 5% each to close at N1.33 and N5.51 respectively on profit booking and market forces.

Market Outlook
We expect the uptrend to continue on the strength of low valuations amidst ongoing volatility and portfolio realignments, ahead of more Q1 scorecards and 2018 Q1 GDP data. Even so, value investors continue to position for the short and long-term on the strength of company fundamentals.
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 and Q1 results are expected in the market arena.
We advise investors to allow numbers guide their decisions while repositioning in any stock, 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 Chart 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.

We say a big thank you to all participants and all who assisted to make the Abuja stock market trading workshop a success. We are grateful and believe that what you learnt will enhance your knowledge and transform your investing strategies, while ensuring profitable returns.
Again, we say thank you.

Ambrose Omordion
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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