All Eyes On Blue-Chip Financials For Next Direction Of Nigeria’s Equity Market

Market Update for March 7, 2018

Midweek’s trading on the Nigerian Stock Exchange (NSE) had a very highly volatile session, with the indicators closing lower on the back of major profit taking in highly capitalized stocks a situation that halted the five-day bullish performance.
Trading activities started on a slight gap down at the opening, but bounced back by the midday and afternoon, before closing the day on a negative note. It got to the recent top resistance line and rolled over to retest the lows. It only made nominal new lows and couldn’t follow through. The NSE index intraday movement went as high as 43,870.09 from lows of 42,939.13 points, and closed at 42,952.70 just a few points off the day’s low.
That notwithstanding, market sentiments, technically, remain positive as revealed by the breadth at the close of the day, a sign that investors and traders’ eyes are focused on the expected corporate earnings to give the next direction as many fundamentally sound companies are yet to make their scorecard available to the market.
Market forces, price adjustment for dividend and profit booking are an integral part of every earnings season as it creates opportunities for repositioning in the market. Upward reversal at this point remains a function of market reactions to expected earnings surprises or disappointments.
Despite Wednesday’s pullback, the market is still trading above its 20 and 50-Day Moving Average on a low volume that signals imminent reversal on positive market sentiments.
Market technicals for the day were weak but mixed with selling pressure of 99% on low volume traded, while buying position was 1%. Volume index was 0.24 with money flow index energy weaken at 59.20 point from the previous day’s level of 65.94 points.
Meanwhile, the All Share index shed 657.07 points to close at 42,952.70 after opening at 43,609.77 basis points, representing a decline of 1.51% on low traded volume that is lower than the previous day’s. Similarly, market capitalisation for the day went down by N236.05bn to close at N15.4tr from an opening value of N15.67tr which also represented 1.51% value loss.
Wednesday’s downturn was as a result of price depreciation by medium and high cap stocks likes of Total Nigeria, Nigerian Breweries, Zenith Bank, Nestle, GTBank, Dangote Cement and Access Bank, which impacted negatively on the NSE’s Year-To-Date returns, cutting it to 12.31%, just as market capitalisation gain for the period dropped to N1.82tr, representing 13.88% YTD growth.
The composite NSE All-Share index and other sectorial indexes were in the red, except for the NSE Insurance that closed 0.38% up due to appreciation in the prices Consolidated Hallmark, NEM and Linkage Assurance. Market breadth was positive as advancers outweighed decliners in the ratio of 26:23.
Market activities in volume and value terms were down by 39.3% and 13.1% to 270.33m shares worth N5.18bn from previous day’s 445.5m units valued at N5.96bn.
Transaction volume for the day was boosted by financial services and conglomerates stocks like Zenith Bank, Sterling Bank, Fidelity Bank, Japaul Oil and Transcorp, which witnessed increased trading to top the activity chart.
Eterna and Japaul Oil were the best performing stocks on the advancers table, gaining 10.2% and 8.0% respectively to close at N6.40 and N0.81 on market expectation of earnings and sentiment, while Unity Bank and Wapic Insurance shed the biggest weights of 9.2% and 6.5% to close at N1.67 and N0.58 respectively on profit taking.

Market Outlook

Expect reversal on the strength of improving positive sentiment for earnings season, we expect the lag in releasing results between Monday and Wednesday to come to an end as the market looks to more numbers between Thursday and next week. 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, 0803205546