Expect Reduced Profit Taking As Investors Position For Month-End, Dividend

Market Update for Week Ended February 23 and Outlook for Feb 26- March 2

Performance of stocks on the Nigerian Stock Exchange last week was positive to halt the panic sell-offs, despite closing lower, as buying pressure gradually begins to look up again, while ushering in another recovery that would be expectedly supported by dividend declaration in the ongoing earnings reporting season. There is also the impact of oil price that had been oscillating, but maintained an uptrend over the past week to close at $65.80 per barrel. It is becoming clear now that oil price movement is now one major factor driving global economies and boosting fundamentals of oil producing nations like ours as reflected in the external reserve that had been one of the attraction of foreign investors to the economy and stock market. Added to these are factors like the rising consumer confidence index and other economic data confirming that Nigeria is still on growth path.
The mixed performance witnessed within the period under review followed recovery by stocks from the recent correction as two more earnings reports were released within the period but were below expectation. Transcorp Hotel and Total Nigeria announced dividend of 12.45 kobo and N14 respectively.
The resultant pullback of Total’s share price has impacted its yield to 9.13% as its maintained N17 full year payout of 2016. With the expectation of more early filers to hit the market this new week the possibility of sustained market recovery is high. This week also, specifically on Tuesday, the nation’s Q4 2017 GDP figure is expected to be release by National Bureau of Statistic (NBS) to give the health status of the economy, especially the high expectation for more growth and expansion in 2018 with the huge infrastructure. This is however subject to a faithful implementation of the budget, in addition to political environment, ahead of preparations for next year which has commenced with with the announcement of the timetable. It is a fact that politicians are likely to spend more, especially at a time more than 29 incumbent governors and the presidency are up for grab.
On a Year-to-Date basis, Nigeria’s stock market has returned 11.3%, after hitting high of 17.68% in January due to the correction wave and profit taking that made the market cheaper and attractive to foreign and institutional investors as Price- Earnings Ratio stood at 14.0x; Price/Book, 1.9x; Price-Sales, 1.6x; and an Average Yield of above 5.8%. This is likely to attract more funds from the money market as more Q4 numbers are release in the coming days.
The composite All-Share index for the period remained above its 42,000 psychological line, as a result of the resumed buying pressure and short-lived panic sell off ahead of the 2017 dividend declaration that has resumed in ernest. Market technicals were mixed for the period as traded volume was lower amidst strong buying pressure of 88% and selling volume at 12% of the week’s total transaction that continued the previous week’s down market.
The week ended with the NSE All Share index shedding 67.94 points to close at 42,570.89 points, from an opening figure of 42,638.83 points, representing a 0.16% decline on a low volume lower than previous week’s. Similarly, market capitalisation lost N24.4bn to close lower at N15.3tr from its opening value of N15.3tr, representing a 0.16% value loss for investors.
It was mixed sentiments with sell down subsiding on the strength of increased buying positions, amidst dividend expectation that slowed down profit booking by traders and investors. The NSE ASI’s year-to-date returns dropped to 11.30%, even as market capitalisation growth for the period stood at N1.62tr, representing a 12.34% gain from the year’s opening value.
Within this period, low and medium cap stocks dominated the best performing, especially those that had shed value during the correction wave, as well as dividend paying stocks with possibility of growing their payout. The market is already expecting their full year numbers any moment from now. Others were propelled by market forces.
Transactions were driven by activities in the financial services and consumer goods sectors.
Market breadth for the week was strongly negative with decliners outpacing advancers in the ratio of 54:23 on a lower volume of trades to continue a three-week bear transition.
Stock markets around the globe were mixed over the past week, with all but the U.S market closing higher due to economic indices and the release of minutes of the Fed meeting during the week which signaled possibility of rate hike and higher inflation which was enough to trigger sell-offs. Investors already know the impact of higher interest rates on the stock market at a time oil price had maintained an upward trend. Markets in Europe and Asia were upbeat as weaker sentiment in the U.S markets strengthened ‘BUY‘ interests in other markets including Nigeria’s. The positive economic growth in the Euro zone has been a plus for markets in that region.
Back home, the NSE All-Share Index opened the week with a decline of 1.53%, but was reversed on Tuesday when it gained 0.38%. This was sustained till the last three trading days of the week when the NSEASI gaining 0.02%, 0.24% and 0.74% respectively to reduce loss for the period to 0.16%. The market also became stabilized as investors took advantage of low prices to continue their repositioning ahead of the earnings season.
The composite index and all sectoral indices closed lower for the period, except NSE Banking, NSE Insurance and NSE CG that were higher at 1.52%, 1.32% and 0.27% respectively, while the NSE AseM remained flat.
Market activities were mixed with volume and value down by 26.4% and 21.7% to 2.02bn shares worth N21.74bn from the previous week 2.94bn units valued at N27.96bn.
The week’s best performing stocks were Livestock Feeds and Japaul Oil that gained 19.0% and 16.7% respectively to close at N1.19 and N0.42 per share, due to low price attraction for Livestock and government incentive for the sector, while Japual’s followed the announcement of a $350m financing deal with a foreign company. The worst performing stocks for the period were Conoil and Courtville Business Solutions that lost 18.3% and 15.8% to close at N32.10 and N0.32 respectively, on the back of market forces.
Market Outlook
Being the last trading week for February and the beginning of March, the last month for companies with December 2017 year-end to present their results, it is safe to expect strong recovery moves by the market, driven by end of the month trading account balancing, even as more companies file their numbers. All eyes are however on dividend stocks, especially those that meet investors’ expectations.
Also, expect volatility and repositioning to continue, while profit taking will reduce on the strength of expected payout 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 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. 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, a big THANK YOU to facilitators and participants that made the Chart Summit over the weekend a huge success. The eyes of participants were opened to the three tents of technical analysis and how it can enhance traders income, as well as simple trading indicators and tools for successful traders were revealed. Charting of the NSE Index on short and long term direction movements were carried out to guide investors and traders using technical indicators to know the energy behind funds entering the market, or individual stocks and when such funds begin to exit.
Here are some of the great feedbacks from thejust concluded Chart Summit:

I have not seen a more lucid, concise, organized & insightful trading and investing educational presentations than the chart summit. All the speakers opened my eyes to how to manage risk using TA, despite the fact that I have been playing the market for 21 years. Mr Ambrose thank you. Please keep this good work you are doing for Nigerians.
Ikechukuw Olisa, an investor

Ambrose and Tunde’s presentations were the simplest, clearest and best understood of the many that I have heard in my trading lifetime of nearly 25 years, please keep it up. Thanks for your time
Oyebola Ademola

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Thanks Mike for opening my eyes to risk management and portfolio selection using Technical Analysis tools. Thanks to investdata for putting chart summit together for novice and advance traders. It was well presented and right to the point. Again thanks so much for the beautiful presentation. It’s superb.
Musa Ahmed

Chart Summit on technical analysis for novice and advance traders home study pack will be available on Friday, March 2, 2018, for those who have booked for the USB, you can play it on your phone, TV and laptop. Those interested in the pack should send ‘Yes’ or call any of: 08032055467, 08028164086 or 08111811223.

Ambrose Omordion
CRO | Investdata Consulting Ltd

Tel: 08028164085, 0803205546