Market Update for August 30
As Investors Await Unveiling Of Nigeria’s Q2 GDP Numbers On Tuesday
Trading activities on the floor of the Nigerian Stock Exchange on Wednesday was highly volatile and negative for third consecutive session, closing lower on a widened negative market breadth but relatively high volume when compared to the previous session but still below the recent market traded average volume. The continued selloff at the opening of trading session on midweek dragged down the index sharply in the morning hours until afternoon when it retested the breaking down of the support and psychological line of 36,000 to a low of 35,515.11 before bouncing back marginally during the last 15 minutes of trading to 35,629.13 thereby reducing the day’s level of loss. The market seem to be forming a double that indicates reversal is in view, despite the consolidated down trend since the beginning of the week after a head and shoulder chart formation that supported this current pullback or correction as profit taking persist.
The market seem to have overlooked the strong numbers of the first set of banks and the closing of book for their interim dividends, given that these stocks price drops despite releasing their long awaited numbers that were impressive and very promising. Even the international markets that are currently facing myriads of challenges are rebounding gradually with many of them closing Wednesday in the green. The continued slide in the face of otherwise robust numbers and fundaments therefore suggests that government should do the needful at this point. It is important to note also that since President Muhammadu Buhari returned to the country after 103 days away in London for a medical vacation, many investors have preferred to stay on the sidelines, watching to see some giant economic decisions or steps that would support the economic recovery so far recorded, but what we are seeing is conflicting statements from Dr. Ibe Kachikwu, the Minster of Petroleum and a Nigerian National Petroleum Corporation (NNPC) that is answerable to the President about the exact cost of crude production by Nigeria. Add this to the obvious fact that money accumulated from the subsidy removal was not saved, even as we hear that it was ploughed into the economy. We are still awaiting the details of where such was invested for public good at a time the investing public expects to hear that more funds have been released for capital projects that will impact positively on the system. One would also have expected that at this time, stimulus packages would have been released to target different economic sectors to boost productivity and complement the efforts by the Central Bank of Nigeria (CBN) to ensure that the anticipated recovery is significant and sustainable. We are aware however that the recent funds approval for the Power would boost generation and impact the economy in the long run, there is need for complementary investments that would ensure that the gains therefrom are meaningful and long-lasting.
Back to the market, selling pressure stood at 83%, to support the down market as revealed by the volume traded index of 0.73, while buying volume was 17% of the day’s total transaction, as shown in the market breadth that had remained negative week-to-date.
Meanwhile, Nigeria’s Composite NSE ASI shed 536.80 basis points to close at 35,629.13 point, compared to the 36,165.93 points opening level, slipping below the 36,000 mark, representing a 1.48% decline on a high volume traded, when compared to previous day. Similarly, market capitalisation for dropped by N185.02bn to close at N12.28tr, from an opening value of N12.47tr, representing a 1.48% value loss in the investment portfolio of market players.
The downturn in the share price of GTBank, FBNH,UBA, Access Bank, Stanbic ITBC, Double One, Dangote Cement, Forte Oil and Guinness Nigeria during the session impacted negatively on the ASI’s year-to-date returns, reducing it to 32.58%, just as market capitalisation dropped to N3.04tr within the period, which left it at 33.04% above the year’s opening value.
Market breadth for the day remained negative as the number of decliners widened to outpaced advancers in the ratio of 31:6 on a relatively low volume of trades to continue its three-day bear transition.
Market activities in terms of volume and value were up by 66.09% and 94.04% respectively to 239.91m shares, worth N2.93bn, as against previous day’s 144.45m units, valued at N1.51bn.
Also, transaction in the shares of Fidelity Bank, Sterling Bank, Access Bank, UBA and FBNH topped the volume chart.
At the close of the day’s trading session, Cutix topped the advancers’ log, gaining 9.95% to close at N2.43 each on the back of market forces and its impressive Q1 numbers, followed by May & Baker with a 4.51% notch at N3.01 per share, on market forces and expected impact of government’s policy on the sector/company.
On the flipside, First Aluminum and Nahco lost 5.00% to close at N0.57 and N3.23 per share respectively on market forces, ahead of Double One’s 4.99% to close at N165.11per unit on market forces.
TODAY’S OUTLOOK
As the last trading day of August, the volatility will continue amidst profit booking and repositioning in interim dividend paying stocks ahead of book closing by taking advantage of pullbacks, even as we expect improved efforts from fiscal and monetary authorities to sustain the ongoing economic recovery. Moreso, Nigeria’s second quarter GDP figures are to be published by the Nigeria’s National Bureau of Statistics (NBS) on Tuesday, September 5, 2017, to officially confirm whether or not Nigeria is finally out of recession.
However, investors need not panic if they take position based on strong numbers and future prospects of any stock since there is no bad news in the market.
Again, we advise that investors allow numbers to guide their decisions while repositioning for the rest of the year’s trading activities, especially now that prices of stocks are looking down ahead of the improving economic fundamentals, amidst the wait for the Federal Government to complement initiatives of the monetary authorities needed to quicken Nigeria’s economic recovery. It is time to use your technical tools to take decision by knowing the support and resistant level to reposition or exit any position.
Be reminded once more that industry potential, market timing are 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. Market is in phases know it in order to manage your trading and investing risk. For stocks that should be on your shopping list to buy in this oscillating market or pullbacks sign up to INVESTDATA BUY AND SELL signal setup by calling 08032055467.
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MR. OMORDION AMBROSE
CHIEF RESEARCH OFFICER
INVESTDATA CONSULTING LIMITED
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