Delayed: Expect Continued Volatility, Profit Taking, Portfolio Reshuffling Ahead Of Audited Financials
Market Update for February 1
Volatility continued at Thursday’s trading on the Nigeria Stock Exchange, kicking off the month of February on a positive note to reverse the previous day’s down market.
The day started out with gap down at its opening, which lingered through to midday but rallied back to the recent key resistance and formed a Doji candlestick pattern that supports continuation of uptrend on above average traded market volume.
Investdata research reveals that the February has been a bullish month over the past decades, recording 13 years of up-market and seven year of down market as shown in the table above.
We therefore expect a breakout of this resistance level and retesting the market’s highest level or even attaining a lower-low, as wave 5 extension movement is not solid yet, but there is the possibility of stocks riding on best January performance since the 1998s with full year earnings reporting season commencing any moment from now as early filers hit the market with their financials, especially from non-banking and insurance stocks like United capital, FO, NB, Nestle and others.
This will add momentum to the market if the numbers are beyond expectations and investors are rewarded handsomely, because dividend yields are likely to be low due to the relatively high prices of equities at this time.
Market technicals for the first day of the new month were mixed as reflected in the volume and breadth, despite closing higher.
Manufacturing activities in the Nigerian economy appear to have kicked off the year on a positive note as revealed through the Central Bank of Nigeria (CBN) Purchasing Managers’ Index (PMI) for January, which saw a marginal decline, but came higher than expected due to impact of the January effect. The January PMI decreased to 57.3 from 59.3 in December, however remaining above the 50 points threshold for 10th consecutive month to indicate expansion in the manufacturing sector. With the recent removal of 36 item from the 41 items barred from accessing the CBN’s official forex window. While we await reasons for the removal, Investdata believes the action seems too early and needs convincing that the removal is not induced.
Meanwhile, the composite NSE All-Share index gained 116.53 points to close at 44,460.18 basis points after opening at 44,343.65, representing a growth of 0.26% on a high traded volume that was lower than the previous day’s. Similarly, market capitalisation climbed by N58.94bn to close at N15.95tr, after opening at N15.9tr, which also represented 0.37% value gain.
The upturn in the market was due to price appreciation in medium and high cap stocks like Dangote Cement, Unilever, UBN,CCNN, Dangote Flour, UBA, Okomu Oil, Zenith Bank, Seplat and Flour Mills that impacted positively on the NSE’s Year-To-Date returns, which further moved up to 16.25%, just as market capitalisation increased to N2.35tr, representing 17.23% YTD growth.
The benchmark index and other sectorial indices were in the green, except for the NSE Pension, NSE Consumer Goods, NSE Banking and NSE Insurance that fell by 0.66%, 0.41%, 0.15% and 0.91% respectively, while the NSE AseM, remained unchanged. Market breadth was negative as decliners outpaced advancers in the ratio of 35:22, to halt the mid-week down market.
Market activities in volume and value terms for the day were down by 3.27% and 55.67% respectively to 630.58m shares worth N3.44bn from the previous day’s 651.9m units valued at N7.76bn. Transaction volume for the day was considerably boosted by conglomerates and financial services sector stocks like Transcorp, Skye Bank, Diamond Bank, Wapic Insurance and FCMB, which continue to witness increased trading volumes to top the activity chart as most traded.
The day’s best performing stocks were Aiico Insurance and Unilever, which topped the advancers’ table after chalking 8.82% and 5.06% to close at N0.74 and N46.75 respectively, on full-year earnings expectation. LASACO and African Alliance Insurance were the worst performing, shedding 9.52% and 8.33% to close at N0.38 and N0.44 each, on market forces.
TODAY OUTLOOK
Being the last trading of the week, expect volatility, profit taking and portfolio reshuffling/ repositioning to continue ahead of full year audited reports that will be in the market very soon. As revealed by the table above that the month is likely to be bullish, hence the need for investors to seek value stocks with high possibility of pay dividend or bonus.
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 08028164085.
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The workshop is scheduled as follows:
DATE: February 24. 2018
TIME: 10am – 3.00pm
VENUE: Ostra Hall & Hotel, Behind MKO Abiola Gardens, Opposite NNPC Gas Plant, CBD, Alausa, Ikeja. Lagos.
What you will learn at the Technical Analysis Chart Conference
1. The 3 Simple trading secrets that can help anyone succeed at investing
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Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467
