Equities

Investors Await More Earnings Reports, But Keep Eyes On Economic Data

Market Update for October 25

The nation’s equity market on Wednesday had a volatile session as usual, but unlike in recent times, it closed positive as more impressive earnings strengthened the momentum to keep the market within the rising channel chart pattern as its trading above the 20 day moving average on a high volume of trade and healthier market breadth. The positive technicals signal the very short term rally in the last few day of the earnings reporting season that comes to an end officially on October 31, which may likely support the current trend if the remaining companies release impressive financials.
The session started with a gap up that was sustained till the end, closing higher, despite the intraday up and down movement that broke out the recent resistant level to a high of 36,754.39 and low of 36,531.62 which was the opening point for the day. Earnings surprises in some companies and expectation from some in the banking, consumer goods, agribusiness and other sectors have triggered demand for some stocks despite the relatively low liquidity in the market at the moment. Strong and improving company fundamentals remain points of attraction as the season and year winds down.
Despite the positive technicals and high volume traded, mixed sentiment was revealed in buying and selling pressure as volume index was 1.37 for the day, while buying position was at 41% and 59% selling volume of the day’s total transaction, to extend the two day bull transition.
The naira appreciated against other currencies of the world supported by improved liquidity in the investors and exporters window of the inter-bank foreign market that continues to enjoy sustained intervention from the Central Bank of Nigeria (CBN) as part of efforts to support economic recovery from recession and thereafter put it on the path of growth.
Meanwhile, the composite NSE All Share Index gained 91.23 basis points up to close at 36,622.85 from 36,531.62 points, which represented a 0.25% growth. Market capitalisation however increased by a higher N100.26bn to close at N12.68tr, as a result of additional shares of added to those outstanding for Guinness Nigeria Plc, following its recent right issue that achieved 120% subscription that has impacted share price movement. It is worthy of note that sustainability or otherwise of this trend will be a function of the company’s earnings performance, the first test of which would be its first quarter result the market is expecting any moment from now. With the additional shares of Guinness Nigeria, the NSE’s market capitalization increased by 0.80% from previous session’s N12.57tr.
The upturn in the share prices of Zenith Bank, UACN, UBA, Seplat Petroleum Development Company, National Salt, Fidson Healthcare, FBNH, Dangote Flour, Dangote Sugar and Honeywell Flour, impacted positively on the ASI’s year-to-date return, which increased to 36.27%, just as market capitalisation has grown by N3.43tr YTD, representing a 37.09% rise above the year’s opening value.
Market breadth for the day remained positive with advancers outnumbering decliners in the ratio of 23:12 on a high traded volume that was higher than previous day’s level to sustain the bourse for its second day of bull run.
Market activities, in terms of volume and value were up by 61.62% and 157% respectively to 323.00 million shares, valued at N4.66 billion from the previous day’s 199.86 million units valued at N1.81 billion.
Transactions in the shares of UBA, Zenith Bank, Access Bank, Fidelity Bank and Guaranty Trust Bank topped the volume chart.
At the close of Wednesday trading, Fidson Healthcare topped the advancers’ log, gaining 9.82%, to close at N3.69 per share, on impressive Q3 earnings surprise, followed by C&I Leasing with 7.60%, which was on market sentiment and expected Q3 numbers.
On the flipside, Cutix again came under attack, following which it lost 9.36% to close at N2.13 on profit taking activities; followed by Forte Oil which shed 4.99% to close at N44.65 per unit on market forces, despite the company’s relatively impressive Q3 number.
Also, during the trading session, ETI, Continental Reinsurance, Multiverse and others released their Q3 earnings available to the market.

TODAY’S OUTLOOK

As the market opens this morning, volatility may continue in the midst of repositioning and profit taking, being the peak week for earnings reporting season, as more companies are expected to release their numbers.
Again, we advise that investors allow numbers to guide their decisions while repositioning for the rest of the year trading activities, especially now that prices of stocks are moving up and down 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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CRO | Investdata Consulting Ltd

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