Post Views: 268 Market Update for June 5 The growing demand for equities continued among investors on the floor of the Nigerian Stock Exchange on Mond...
Market Update for June 5
The growing demand for equities continued among investors on the floor of the Nigerian Stock Exchange on Monday, sustaining the bullish trend in the process, with more stocks hitting new highs. In the process also, the bourse recorded the highest daily gain in the last four years on a huge volume of trades, with a 4% intraday gain before the composite All Share index closed for the day at 3.85%. The Industrial sector emerged the biggest contributor, chalking a 6.49% gain to close at 1,974.02. All sectorial indexes for the day closed in the green except the NSE Asem Index which remained unchanged.
The rekindling confidence in the market is being driven by a combined effect of improving liquidity in the FX market and the seeming improvement in corporate earnings as revealed during the just concluded season.
While the FX liquidity has been greatly enhanced through the import and export window recently created by the Central Bank of Nigeria (CBN) as part of easing access to foreign exchange to meet genuine customer demands, which has greatly supported and helped the naira appreciate, the corporate earnings further boosted the market’s fundamentals. In any case, stock valuations remain low, despite the current rally when compared to other Africa markets looking at their share Price to Earnings (P/E) ratios.
The recent rebound in Nigeria’s stock market has resulted in a 21.22% Ytd return on investment, following increased interest shown by foreign investors whose share now stands at 45.84%, up from 40.83% in the same period of 2016.
INVESTDATA is therefore confident that Nigeria will be retained in the MSCI Frontier Markets Index when a decision is finally announced later this month. The announcement could further boost the ongoing rally, considering the funds that track the index as many the stocks in that basket are still undervalued.
If the Federal Government is ready to do the needful or walk the talk, it would greatly enhance the nation’s economic recovery and further boost confidence in the system and stock market. A starting point would be for the 2017 budget to be signed into law without further delay to commence the immediate implementation of Economic Recovery and Growth Plan (ERGP). This is the only way to achieve the projected recovery in the economy from recession.
Meanwhile, the NSE’s composite All-Share index gained 1206.75 basis points on Monday to breakout another psychological line of 32,000 on a day trading close at 32,578.38, after opening at 31,371.63 points, representing a 3.85% growth. Although volume traded remained huge, it was however lower, when compared to previous day’s transaction level. Similarly market capitalisation rose by N417.18bn to close at N11.26tr, from an opening value of N10.85tr, representing a 3.85% value gained in investor portfolio.
The uptrend in prices of high cap stocks during the day impacted the All-Share index positively; further boosting year-to-date return to 21.22%, while market capitalisation for same period stood at N2.02tr, representing 21.80% above the year’s opening value.
Market breadth for Monday remained positive as the number of advancers outnumbered decliners in the ratio of 44:13 on huge volume of trade to continue the bull-run.
Market activities yesterday in terms of volume and value were marginally down by 9.59% and 7.30% respectively to 640.24m shares from previous day’s 708.41m units and N7.68bn, compared to previous day’s N8.26bn. Transactions in the shares of FBN Holdings, FCMB, FIDELITY BANK, ZENITH BANK, AND SKYE BANK topped the volume chart to close the day’s trade.
At the end of Monday’s trading session also, Mobil Nigeria topped the advancers’ table with its share price gaining 10.25% to close at N319.72 per share, purely on the activities of market forces. It was followed by Conoil with a 10.23% gain to close at N41.17 per share against the backdrop of the expected late filing of its 2016 full year earnings report.
On the flipside, Union Dicon led the decliners’ table, dropping 4.95% to close at N13.45 also on the interplay of demand and supply; C & I Leasing followed with a 4.55% to close at N0.63 each on profit taking.
As market opens this morning, expect mixed action of profit taking and repositioning in value stocks to continue in a galloping market, which means investors should not panic if they take position based on strong numbers and future prospects of any stock.
Again, we advise that investors allow numbers to guide their decisions to reposition for the rest of the year’s trading activities, especially now that prices of stocks are looking up ahead of recovery economic fundamentals, if the numbers will support the price reversal or continuation.
It is time to use your technical tools to take decision by knowing the support and resistant level to reposition or exit any position.
Once more, at the risk of repeating oneself, we must reiterate that industry potential is very important when picking a stock, because there are factors that are sector-specific and would naturally impact positively or negatively on companies operating within such an industry, especially now that the economy is recovering. Invest wisely and sign up for investdata buy & sell signal setup and the upcoming Traders & Investors workshop call 08032055467 and 08111811223
NSEASI DAILY TIME FRAME
The volume index for the Monday was 1.57 as buying position was 93%, while selling volume was 7%, yes still a bullish sentiment but signal imminent pullback as traders cash out profit from the rally. Trade with caution.