Market Update for November 6

Trading on the Nigeria Stock Exchange closed narrowly down on Monday to start the week as market players continued to interpret and digest the numbers posted by listed companies in the just concluded earnings season, while identifying those that really beat market expectation and analysts’ estimates. The ongoing portfolio restructuring and balancing has created opportunities for short-term trading especially given that year-end sentiment and seasonal changes are underway, at a time impressive financials released continue to boost confidence in higher dividend in the full year earnings reporting season of 2018.
The benchmark index on intraday gain broke out the psychological line of 37,000 to touch high of 37,014 from the 36,910.49 low before pulling back to close the trading session marginally lower from Friday’s level, despite the seeming range at the current resistance level, breakout or reversal is imminent. Meanwhile, the patterns that you see on the index were solid on a high volume, even as the technicals were mixed.
The day started with slight gain in the morning, pulling back in the midday before running up in the afternoon to hit the day high, but pullback from closing at the highs for the day.
The economic recovery is currently threatened by government’s actions and inactions in its fiscal policy reforms which had extended to its budget implementation style that now reflects in the economy, despite the huge appropriation in 2016 and 2017. There is also the inability to do the talk, triggering the recent threat by the Niger Delta Avengers- a militant group, especially now that we have bounced back to a production level of 1.8m barrels per day of crude oil production at $62pb that had impacted the nation’s external reserves. It is important that government keeps its terms of their agreement by moving into action to save Nigerians from going through the experience of 2016 again.
The bear sentiments was high at 81% to reveal selling pressure, while volume index was 1.70 for the day, and buying position at 19% and 81% selling volume of total transaction, to reverse Friday bull session.
Meanwhile, the composite NSE All-Share index shed 8.76 basis points to close at 36,930.83 from 36,939.59 points, which represented a 0.02% decline, just as market capitalisation dropped by N2.98bn to N12.78tr, representing 0.02% value loss from previous session’s N12.79tr.
The marginal downturn recorded was as a result of price loss suffered by medium and high cap stocks like NB, Zenith Bank, Flour Mills, Total, 7-UP, International Brewery, UBA, and FBNH, which impacted negatively on the ASI’s year-to-date return, reducing it to 37.42%, just as market capitalisation growth YTD stood at N3.53tr, representing a 38.23% rise above the year’s opening value.
Market breadth for the day was positive as the number of advancers outnumbered decliners in the ratio of 23:20 on a huge traded volume that was higher than previous day’s level to stop the bull.
Market activities, in terms of volume and value were mixed as volume was up by 29.21% to 466.52m share from Friday 361.05m units, while value declined by 21.17% to N2.9bn from the previous day value of N3.68bn.
Transactions in the shares of Jaiz Bank, FBNH, Transcorp, Africa Alliance Insurance and Diamond Bank topped the volume chart, even as Diamond Bank topped the advancers’ table, gaining 9.43%, to close at N1.16 per share, on the back of plans to divest its West African subsidiaries, thereby positively impacting its book. It was followed by United Capital, which notched 6.96%, to close at N3.38 on market forces.
On the flipside, Champion Breweries, shed 4.92% to close at N2.32 on profit taking; followed by Total Nigeria’s 4.66% loss, to close at N225 per unit on profit taking and the fact that its Q3 numbers came below expectation, despite the offer of a N3.00 interim dividend.

TODAY’S OUTLOOK
As the market opens this morning, expect volatility to continue as portfolio rebalancing, profit taking and repositioning in the earnings analysis and interpretation of numbers ahead of economic data and year end cycles.
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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