Bargain Hunters Utilise Pullbacks To Position In Dividend Stocks, Expected Financials

Market Update for March 8, 2018

Nigeria’s stock market index rebounded on Thursday to finish well on a strong buying sentiment and volatility. It was a very mixed session and a consolidation day which started out with a gap to the downside before retracing up gradually by the mid-morning, remaining above the psychological line of 43,000 basis points. This very formidable resistance will further breakout if earnings reports and payout beat expectations. During the trading session investors and traders took position in banking, consumer goods and oil stocks, guided by economic statistics which reveal strong growth in these sectors as of 2017 Q4 and has so far reflected on the few numbers released from such sectors.
The NSE All-Share index’s intraday movement went as low as 42,777.92 from the opening figure of 42,952.70 points, to close the day high at 43,092.63.
The international markets yesterday rebounded after a surprising decision by the European Central Bank (ECB) to retain its rates until September, while the United States formalized its new tariff regime ahead of job market report.
This is just as the relatively high price of oil continues to influence Nigeria’s reserve positively as it continues to attract more direct and indirect investments to the economy, following which economic data remain upbeat since Q2 of 2017.
Thursday’s retracement on the NSE is signals that bargain hunters are taking advantage of the pullbacks to position in dividend paying stocks that are yet to release their scorecards. As the market continue to make higher lows in up direction to support the index trading above its 20 and 50-Day Moving Average on a high volume that supports positive performance as we go into the peak session of earnings reporting season, ahead of Q1 2018 corporate earnings and Q1 economic data.
Market technicals for the day were positive and strong with buying pressure of 100% on a high volume traded, while selling position was 0%. Volume index was 0.52 with money flow index energy weakening at 51.63 point from the previous day’s level of 59.20 points.
Meanwhile, the composite index gained 139.93 points to close at 43,092.63 after opening at 42,952.70 basis points, representing a growth of 0.32% on high traded volume that is higher than the previous day’s. Similarly, market capitalisation for the day was up by N50.27bn to close at N15.48tr from an opening value of N15.4tr which also represented 0.32% gain in investors’ positions.
The session’s upturn was attributed to value gain by stocks likes of Nigerian Breweries, Guaranty Trust Bank, Stanbic IBTC, FBNH, Unilever, Flourmills and Access Bank, which impacted positively on the NSE’s Year-To-Date returns, rising to 12.70%, just as market capitalisation gain for the period improved to N1.88tr, representing 14.10% YTD growth.
All-Share index and other sectorial indexes closed higher, except for the NSE Insurance, NSE Oil/Gas, NSE Industrial and NSE AseM that closed lower for the day due to price depreciation in NEM and AXA Mansard, decline in Forte Oil and Dangote Cement. Market breadth was positive as advancers outnumbered decliners in the ratio of 30:28.
Market activities were mixed as volume was up by 112.63% to 571.81m, from previous day’s 270.33m units, while value was down by 34.48% to N3.39bn, from Wednesday’s N5.18bn.
Transaction volume for the day was boosted by oil and financial services stocks like Capital Oil, Japaul Oil, Multiverse, Zenith Bank and FBNH, which witnessed increased trading to top the activity chart.
The top performing stocks were Japaul Oil and Wapic, which gained 9.90% and 8.6% respectively to close at N0.89 and N0.63 on market sentiment, while C & I Leasing and Regency Insurance were the worst performer shedding 9.28% and 7.5% to close at N1.76 and N0.37 respectively on profit taking and market forces.

Market Outlook

We expect the positive sentiment and performance to be sustained despite being the last trading day of the week that had become sell market in recent years, but on the strength of continuing positive sentiment for the earnings season. We expect more scorecards to pour next week, a situation that would change the face of the market as foreign, institutional and retail investors seek positive corporate earnings and payout.
Also expect volatility and strong recovery moves to continue and profit taking at different times, depending on the expected numbers.
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 train moves to Port Harcourt this month in line with its resolve to encourage and enhance the return of more retail investors to the Nigerian Stock Exchange (NSE) as a veritable instrument for mobilizing savings, wealth creation and redistribution.
At the Port Harcourt edition investment summit 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. From there, it moves to Abuja on Saturday, April 14, 2018.
As the Nigerian economy continues on its recovery path, participants would learn how to trade intelligently, beginning with setting investment objectives and applying simple tools to help decision making even on impulse.
A statement by Investdata quoted Mr. Ambrose Omordion, its Chief Research Officer as saying: “The training is also to help participants appreciate the changing pattern of the Nigerian economy since its emergence from recession, its effect on company fundamentals, which calls for new strategies for profitable investing. Investors are recovering from the recent market correction due to price decline suffered by equities over the past three weeks.
“Participants will learn how to effectively combine fundamental and technical tools for profiting from the market transformation, while protecting their capital.
“As independent research analysts, InvestData Consulting Limited will also unveil simple steps for surviving any market situation profitably and how to manage profit and loss positions using simple technical analysis tools. We would also be looking at equity investment in a pre-election year and beyond.”
Participants at the Port Harcourt and Abuja legs of the summit would learn how to be among the lucky 10% who manage to consistently play the stock market profitably on their own, guided by our simple trading strategies and buy & sell signal setup.
At Investdata we have been teaching investors simple and proven strategies which when implemented makes you a successful trader and investor in any market situation, especially when it comes to equipping you well enough to know how to protect you portfolios and profit from market corrections in a recovering economy.
We have also, over time, focused attention on attuning the mindset of investors and traders to managing risk, while eliminating emotions when trading so as to avoid irrational investment decisions.
At each of the events, all our stock trading and investing materials that will enhance the knowledge of participants and boost their returns on investment will be available at a discount.
As is our tradition, at our workshop of December 9, 2017, Investdata recommended the following 16 stocks to participants:

African Prudential Plc
Dangote Flour Mills Plc
Dangote Sugar Refinery Plc
Fidson Healthcare Plc
Fidelity Bank Plc
FBN Holdings Plc
Eterna Plc
Access Bank Plc
Dangote Cement Plc
Flour Mills of Nigeria Plc
Honeywell Flour Mills Plc
Presco Plc
Okomu Oil Palm Plc
Total Nigeria Plc
Unilever Nigeria Plc
Zenith Bank Plc

“An analysis of the stocks after four months and one week since December 9 when the summit in Lagos shows that Dangote Flour for example has returned 42.11% from N11.40 each to N16.20. This was after it touched a peak of N17.81 within the period, representing a 56.22% ROI; followed by Eterna, which chalked 35.63%, after its share price climbed from N4.35 on Friday, December 9, 2017, to N5.90 each, just as it recorded a high of 60% returns. FBN Holdings, another of the recommended stock climbed 26.39% from N9.02 per share to close at N11.40 on March 2, 2018, hitting a high of N15.16 each, or 68.07%; while Honeywell Flour notched 23.18%, after closing at N2.71 from N2.20 per share and attaining a price of N3.69, or 67.72% for investors and traders who exited at that price,” Omordion explained.
Also, he added that investors who followed Investdata’s advice to position in African Prudential have gained 22.36% from N3.98 per share at the beginning of the period to N4.87, attaining a 30.65% height within the period; just as investors in Unilever Nigeria creamed 23.89%, which makes it the stock that is closed to its peak during the period. Fidelity Bank’s shares have within the period appreciated by 12.45% to N2.80, but rose as high as N4.33 each, representing 73.89% RoI; while Fidson Healthcare returned 23.68% to close at N4.70, after reaching N5.05 per share, representing RoI of 32.89%; among others.
Two stocks in the pack however underperformed slightly, with Okomu Oil Palm lost 4%, opening for the period at N75.00 and falling to N72.00 per share, after attaining a height of N75.75; just as Flour Mills of Nigeria shed 4% from N35.00 to N33.60; after rising to N37.35 each.
That means a basket built around the above stocks has within the period, without doubt, yielded bountiful returns.

Ambrose Omordion
CRO | Investdata Consulting Ltd
Tel: 08028164085, 08032055467