Market Update for November 16
Nigeria’s stock market on Thursday continued its volatility as traders and investors digested effects of the Moody’s and MSCI Frontier Index review on the economy and market with the indicators turning from red to pale green as players took advantage of the pullback to continue their repositioning and rebalancing ahead of year-end seasonal changes, among others. Despite the weak market technicals, positive earnings surprising so far in the current financial year is likely to boost the market again as positive macro-economic indices continue to give direction. These alone would not however do the magic, as there is need for fiscal reform stimulus to drive recovery and growth needed to boost confidence and attract domestic and foreign investors. It is also expected that the quality of financial sector assets will improved if the government hastens its policies geared towards driving infrastructure development needed to boost economic activities thereby helping the banks to reduce their warehouses of Non-Performing Loans, while boosting customer deposits.
As mentioned in our update yesterday, that reversal is imminent as selling pressure continued to decline. The index slid down at opening until midday, moving up and down at first before an afternoon rebound after touching intraday low of 36,541.90 which is becoming the NSE’s support level in recent times, as it closed higher at 36,634.89 from the day’s peak of 36,679.93 basis points.
Buying pressure was high at 67%, to reverse the selling pressure of 86% in the previous day. Volume index for the day was 0.85 and sell position- 33% of the total transactions for the day, bringing an end to the two-day bear transition on higher volume. This is a signal that market recovery is underway, especially with institutional money flow indicator still looking up, suggesting that smart money is taking advantage of the pullback to accumulate.
Meanwhile, the composite NSE All-Share index gained a sluggish 17.44 basis points to close at 36,634.89 from the 36,617.45 points it opened, which represented a 0.05% marginal growth. Similarly, market capitalisation was up by N77.05bn to N12.75tr from the previous N12.67tr as result of the listing of news shares of Unilever Nigeria and Transnationwide Express, following their successful rights issues that boosted the market value.
Value gain recorded by medium and high cap stocks like Unilever, Double one, PZ, 7-Up, Zenith Bank, Guaranty Trust Bank, Stanbic IBTC and Access Bank, impacted the ASI’s year-to-date return to 36.32%, just as YTD growth in market capitalisation stood at N3.56 trillion, representing a 38.03% rise above the year’s opening value.
Market breadth remained negative as the number of decliners outnumbered advancers in the ratio of 25:17 on a low traded volume that was higher than previous day’s level.
Market activities in terms of volume and value were up by 18.18% and 252.71% respectively to 217.75 million shares valued at N11.71bn from the previous day’s 184.25m units, worth N3.32bn.
At the end of Thursday trading session, BocGas topped the advancers’ chart, gaining 9.88% to close at N4.56 per share, on market forces, followed by PZ Cussons which notched 5% to close at N21.42 on low price attraction and market sentiment, just after it was removed from the MSCI Frontier Market Index list.
On the flipside, Caverton shed a further 8.97% to close at N1.32 on profit taking. It was followed by University Press, which lost 5% to close at N2.66 each on profit taking.
Being the last trading day of the week, expect volatility to continue due to rebalancing and repositioning of portfolio. Profit taking to slow down as a result mixed performance so far in the week. Two crucial economic data are expected next week: There is the release of Q3 GDP figures by the National Bureau of Statistics (NBS) and the two-day Monetary Policy Committee (MPC) of the CBN which begins on Monday. The outcome of the meeting would be released via a communique on Tuesday after, providing data such as the benchmark Monetary Policy Rate (MPR), Liquidity Ratio and Cash Reserve Ratio (CRR), among other hints that give an over-view of economic behaviour going forward.
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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