Market Update for June 8
Nigeria’s stock market sustained its uptrend yesterday as the indices gapped up in the early hours of Thursday’s trading to breakout the psychological 33,000 line, before pulling back to close trading higher, despite profit taking in high cap stocks like Dangote Cement, Guaranty Trust Bank, Julius Berger and Lafarge Africa. The mixed sentiment in the market was revealed by volume index of 1.18 and a buying position of 58%, while selling volume was 42% of the day’s total transactions.
The rebound by petroleum stocks on the exchange as revealed by their dominance of the top advancers table in the past few days and index gain of 4.93% to lead the benchmark index and all other sectorial indexes. This was a result of the resumption of exports at the Forcados Terminal which has enabled the players quickly de-constrain production. It is expected to strengthen the industry’s underlying fundamentals following the lifting of the force majeure, a welcome development that will influence performance of companies in the sector. These factors are expected to reflect in the Q2 numbers of these companies, a situation that would be rewarded by the market. This new development, in and addition to the Petroleum Industry Governance Bill (PIGB) to govern the sector is expected to impact the economy and especially Nigeria’s banking industry that had ballooned non-performing loan as a result of exposure to the oil sector.
Also on Thursday, stock markets around the world were mixed to close higher, as oil price tries to rebound at the international market, in addition to the United Kingdom’s successful elections, which puts British Prime Minister Theresa May under pressure to resign on Friday after losing her parliamentary majority, plunging the country into uncertainty as Brexit talks loom, amid fears the Conservative leader will be unable to form a government and could even be forced out of office, especially after two terror attacks.
Meanwhile, the Composite index NSEASI for the day gained 251.26 basis points to close at 32,937.98, after opening at 32,686.72 points, representing a 0.77% growth on a huge volume traded, that is higher when compared to previous day’s transaction level. Similarly, market capitalisation was up by N86.86bn to close at N11.39tr, from an opening value of N11.3tr, representing a 0.77% value gain in investors’ portfolios.
The upturn in the prices of medium and high cap stocks impacted the All-Share index positively, boosting year-to-date return to 22.40%, while market capitalisation for same period stood at N2.46tr, representing a 22.97% appreciation above the year’s opening value.
Market breadth for Thursday was positive and strong as the number of advancers outnumbered decliners in the ratio of 47:16 on huge volume of trade to continue previous day’s bull-run.
Market activities in terms of volume and value were up by 5.93% and 18.82% respectively to 528.69m shares from previous day’s 499.11m shares and N4.84bn, compared to previous day’s N4.07bn. Transactions in the shares of ACCESS BANK, FBNH, UBA, FCMB and FIDELITY BANK topped the volume chart to close the day’s trade.
At the end of the trading, Forte Oil topped the advancers’ log with its share price gaining 10.22% to close at N58.55 per share, on Q2 expectations and improving fundamentals in its industry. It was followed by International Breweries with a 10.21% gain to close at N29.24 per share, while still basking on the euphoria of announcement of its proposed merger with two unlisted sister companies. This is expected to boost InterBrew’s performance going forward, as well as its March year-end expected to hit the market soon.
On the flipside, Golden Brewery led the decliners’ log, after dropping 4.71% to close at N0.81 also on market; while Jaiz Bank followed with 4.71% to close at N0.81 each on market forces.
As market opens this morning, expect mixed action of profit taking and repositioning in value stocks to continue, which means investors should not panic if they take position based on strong numbers and future prospects of any stock.
Again, we advise that investors allow numbers to guide their decisions to reposition for the rest of the year’s trading activities, especially now that prices of stocks are looking up ahead of recovery economic fundamentals, if the numbers will support the price reversal or continuation.
It is time to use your technical tools to take decision by knowing the support and resistant level to reposition or exit any position.
Once more, at the risk of repeating oneself, we must reiterate that industry potential is very important when picking a stock, because there are factors that are sector-specific and would naturally impact positively or negatively on companies operating within such an industry, especially now that the economy is recovering. Invest wisely and sign up for investdata buy & sell signal setup and the upcoming Traders & Investors workshop call 08032055467 and 08111811223
NSEASI DAILY TIME FRAME
As indicated in the graph above, the index is still galloping on a huge volume of trade with mixed sentiment as at Thursday, touching the 33,000 mark on this level of volume is a good test of breakout that confirms strength in this rally. But caution should be taken as RSI and other indicators are it overbought region.
Have a great trading day.