Ahead Of Earnings Season, Robust Data, Investors Position In Value Stocks

Delayed: Market Update for January 17

Mid-week’s trading on the Nigeria Stock Exchange had a bullish outing to extend the rally, despite profit booking by market players to continue its volatility on a huge volume traded. There is also positive sentiments as reflected in the institutional money flow index which continues to look up with stronger energy with the benchmark index heading for a breakout of the 45,000 psychological line to confirm the continuation of its uptrend if market forces remain positive as market opens Thursday morning.
The market closed positive after consolidating the early hour trading run-up, which were much during the afternoon session to close the day. During the session, the market hit an intraday high of 44,901.01 for the first time in the last 5 years from low of 43,956.76.
As the bull rampage continues due to smart money repositioning ahead of earnings season, retail investors and traders should go for value and growth stocks that can support their portfolios when the inevitable wave of correction hits the market, given that the 2017 financial year dividend declaration kicks off very soon.
Market technicals for the day remained positive as many momentum indicators are pointing to a bull market strongly supported by good volume and price performance. The continued improvement in economic data, besides the soaring oil price in the international market and Nigeria’s production output have remained a plus for the economy and equity market.
The buying pressure at the end of Wednesday was 98% while selling position was 2% with volume index at 1.58 of the day’s total transaction. The All-Share index gained 830.52 points to close at 44,885.24 after opening at 44,054.72, representing a growth of 1.89% on high traded volume that was higher than previous levels. Similarly, market capitalisation for the day was up by N297.53, closing at N16.08tr, from an opening value of N15.78tr which also represented 1.89% growth in investors position.
The upturn recorded by medium and high cap stocks at the end of the day impacted positively on the NSE’s YTD returns, pushing it to 17.37%, just as market capitalisation gained N2.47tr, representing 18.15% YTD growth from its opening value.
The composite NSEASI and all sectorial indices were higher, except for the NSE Consumer Goods that dropped 0.64% lower, while NSE AseM was flat. Market breadth remained strong and positive with the advancers outnumbering decliners in the ratio of 40:19 to continue the third day of bullish run.
Market activities in volume and value terms for the day were up by 51.20% and 63.96% respectively to 960.75m share worth N12.52bn from the previous day’s 635.4m units valued at N7.64bn. Transaction volume for the day was significantly boosted by financial services and conglomerate sectors, as trading was heavy in Transcorp,Sterling Bank, Wema Bank, Diamond Bank and Access Bank that topped the activity chart as most traded by volume.
Best performing stocks’ table were topped by CCNN and Diamond Bank, which gained 10.17% and 10.10% respectively to close at N16.14 and N3.16 each. The gains were propelled by positive market sentiments, while National Salt and Cadbury led the worst performing table after losing 4.98% and 4.97% to close at N21.00 and N15.30 respectively, due to profit taking.
We expect profit taking and volatility to continue even as repositioning for quarterly and full year score-cards to hit the market any moment from now as more positive economic data roll in ahead of January’s Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) meeting that should hold next week. This is however if the Senate rescinds or suspend its decision not to consider nominations to fill vacant positions by the Executive over its insistence on retaining Ibrahim Magu as chairman of the Economic and Financial Crimes Commission (EFCC), despite his rejection by the lawmakers. The energy behind money flow index has increased without divergence, especially with price and volume looking up.
However, we would like to reiterate that investors should go for equities with intrinsic value, especially during this season that dividend payment is approaching.
We advise investors to allow numbers guide their decisions while repositioning for the rest of 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. Market is in phases know the cycles in order to manage your trading and investing risk. For stocks that should be on your shopping list to buy in this seasonality changes as the year winds down, sign up to INVESTDATA BUY AND SELL signal setup by calling 08032055467.
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Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08032055467