Investors, Traders Continue Repositioning Ahead Full-Year Earnings Season Peak

Market Update for March 6, 2018

Nigeria’s stock market indexes extended its positive performance on Tuesday, despite the reduction in gaining momentum and mixed technical, maintaining its volatile posture. The day started out with a gap down movement in the first hour of trading and into the mid-morning when it came down hard, held support, rallied back, which was sustained for the rest of the day to close marginally positive. In the process, the index oscillated to lows of 42,912.56 before retracing up to intraday highs of 43,611.76 on improved traded volume that was strengthened by trades in banking stocks.
During the session foreign investors’ interest in banking stocks were evident, especially with the cross deal of 10m units of Zenith Bank at N31.25 executed and the 13.5m share of Guaranty Trust Bank traded at N48.50, which were despite declines in the sector’s index for the day. This also confirmed the continued repositioning of traders and investors ahead of more corporate earnings expectations that has stylishly ushered in the new uptrend. Sustainability of the upward trend however remains a function of market reactions to earnings surprises or disappointments.
The energy behind the market kept its benchmark Nigerian Stock Exchange (NSE) All-Share index above its 20 and 50 day moving average to sustain the positive start of the week.
Market technicals for the day were strong but mixed with buying pressure of 100% on low volume traded, while selling position was 0%. Volume index was 0.41 with money flow index at 65.94 point.
Meanwhile, the benchmark index gained 95.84 points to close at 43,609.77 after opening at 43,513.93 basis points, representing a growth of 0.20% on low traded volume that is higher than the previous day’s. Similarly, market capitalisation for the day rose by N34.43bn to close at N15.67tr from an opening value of N15.63tr which also represented 0.20% value appreciation.
The upturn recorded was sustained as a result of value gain by the likes of Nigerian Breweries, Seplat, Unilever, Flourmills, Zenith Bank, UBA, Dangote Sugar, Dangote Flour, UBN, and NASCON, which positively lifted the NSE’s Year-To-Date returns to 14.03%, just as market capitalisation gain for the period was up to N2.06tr, representing 15.12% YTD growth.
Just like the ASI, other sectorial indexes were in the green, except for the NSE Banking that closed 0.33% down, due price decline in GTBank, Sterling Bank and Access Bank. Market breadth was weak and negative as decliners outnumbered advancers in the ratio of 29:26. Market activities in volume and value terms were up by 76.8% and 3.8% to 445.5m shares worth N5.96bn from previous day’s 252.05m units valued at N5.75bn.
Transaction volume for the day was boosted by financial services stocks like Sterling Bank, Fidelity Bank, Zenith Bank, FBNH and Guaranty Trust Bank, which witnessed increased trading to top the activity chart.
At the end of the day’s trading, Unilever and Caverton were the best performing stocks on the advancers table, chalking 10.2% and 9.9% respectively to close at N59.60 and N2.67 on market expectation of earnings and dividend, while Regency Insurance and Multiverse shed the biggest weights of 9.1% and 7.4% to close at N0.40 and N0.25 respectively on market forces and impact of new pricing rule.

Market Outlook

Expect sustained uptrend on the strength of improving positive sentiment for earnings season, we expect the market to maintain strong energy that will drive prices up as market players expects more earnings to which they would react positively if the numbers beat estimates. 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 payout 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 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