Market Update for December 4
Trading on the Nigerian Stock Exchange started off the week on a positive note to consolidate the four straight trading sessions of bull transition with mixed technical, after Friday’s public holiday declared by the Federal Government.
The day started out with a little upside movement which the index held to throughout the mid-morning but oscillated by the midday to afternoon, hitting intraday highs of 38,023.27 and low of 37,913.99 on mixed sentiments as traders booked profit from the recent rally.
The composite index closed higher in the last hour to extend the five-wave trend, slightly touching the 38,000 level that had become a resistant in recent times and pullback, but it was not strong enough to make the cross meaningful. The volume traded remained high despite the huge drop that was driven by last week’s crossed deal in Transcorp that influenced transaction for that day.
The recent $455m surge in the nation’s external reserves, which took it to $34.82bn in one week as a result of crude oil price crossing $64 per barrel, is expected to boost government revenue and attract more foreign inflows as Central Bank of Nigeria (CBN) intervention in the foreign exchange market continues to impact positively on the value of the Naira. Already, the Purchasing Managers’ Index (PMI) at 55.9 for November, from 55 at the end of previous month, an indication of growth in Nigeria’s manufacturing sector and that the nation’s productivity is still expanding. This will continue to impact the real sector as shown by numbers from manufacturing stocks, offering insights into what investors should expect at the end of the current financial year.
The mixed sentiment on Monday was revealed by volume index of 1.22 with buying pressure of 55% and selling volume of 45% of the total transaction to continue the bull-run. This trend may likely continue depending on market forces, since institutional money flow is green and looking up, but there is need for caution in this short primary bullish market because profit taking is underway. NSE Banking, NSE Oil/Gas, NSE Insurance and NSE 30 were in red while NSE Consumer goods that had laggard before now outperformed the composite index as numbers continuing to reveal trading and investing opportunity in that.
Meanwhile, the All Share Index gained marginal 29.98 basis points to close at 37,974.58, from the 37,944.30 points, representing a 0.08% growth and similarly, market capitalisation was up by N10.76bn to close at N13.23tr from previous day’s N13.22tr, representing a 0.08% value gain. The sustained market upbeat for the day was driven by price appreciation in medium and high cap stocks like Dangote Flour, FBNH, NB, TOTAL Nigeria, Seplat, Dangote Sugar, UBN and Dangote Cement. This impacted positively on the ASI’s year-to-date returns, taking it to 41.30%, just as YTD growth in market capitalisation stood at N3.9tr, representing a 42.87% rise over the year’s opening value.
Market breadth on Monday was negative as the number of decliners widened to outpace advancers in the ratio of 25:19 on a high traded volume that was lower than previous day’s level.
Transactions in terms of volume and value were down by 95.75% and 70.27% respectively to 500.19m shares worth N6.36bn from previous day’s 11.77bn units valued at N21.38bn. The day’s activity was driven by Custodian Allied Insurance, FBNH, Zenith Bank, Transcorp and Fidelity Bank, which topped the volume chart.
Cadbury topped the advancers’ table with a gain of 10.125 to close at N14.25 on market forces, followed by Diamond Bank with 9.94% appreciation to N1.37 on positive sentiment that the recent sales of its investment in SA will boost bottom line.
On the flipside, Fidson Healthcare shed 5% to close at N3.61 each on market forces and profit taking, ahead of Guinness Nigeria, which lost 4.99% to close at N92.35 each, on profit taking.
Expect volatility to continue, as traders take profit, while investors reposition ahead of year-end and Santa Claus season amidst improving and positive economic data.
Again, we advise that investors allow numbers to 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 08032055467.
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