NGSE Continues On Recovery Path, Amid Strong Money Flow, Buying Sentiment

Market Update for June 7, 2018

Nigeria’s stock market had another interesting session on Thursday with the composite index recording its fourth trading session of bull run, crossing over the 39,000 mark and N14tr market capitalisation as mentioned in our midweek’s update. This was on the strength of strong buying interests in fundamentally sound stocks now selling below their intrinsic values.
The renewed patronage in the stock market after a strong pullback that threw the bourse into a negative Year-to-Date return after notching over 17% gain, it does seem, is beyond the March year-end earnings reports expected this month. The rise may be the reaction of investors to the expected impact of fiscal stimulus in form of the recent amendments in Company Income Tax law that is likely to boost dividend income of investors if withholding tax is removed. Also, the National Pension Commission (Pencom) also is coming up with reforms on assets liability risk management of the different classes of funds that would boost participation in the equity market, with the 25% of pension assets investible in the stock market, being long term funds that would help to stabilize the equity market. Also noteworthy is the approval by the Nigerian Senate of the interim report of its Ad-hoc committee on the proposed issuance of promissory notes to settle contractor debt and other obligations, which would also likely positively impact the economy and market.
The NSE compose All-Share Index opened the day with a little gap up and adjusted slightly in the up direction at mid-morning before coming down and then retracing up at midday, a situation that was sustained till afternoon as it touched intraday highs of 39,042.29 basis points from the lows of 38,435.29bs before closing the session at 39,042.11bps. In the process, it extended the motive wave 3 on a strong buying sentiment.
Thursday’s market technicals were positive and strong as traded volume was high in the midst of positive market breadth and improving demand for equities. Investdata daily sentiment reports revealed players buying pressure of 100% and selling volume of 0% on a volume index of 1.49 of the day’s total transactions.
Momentum behind the buying sentiment for the day was reflected on the money flow index at 25.08 points from the previous day’s 15.01 points, which is an indication of improving funds that are still entering the market as at close of business on Thursday. Meanwhile, investors and traders demand for medium and high cap stocks remain high.

Index and Market Cap
The All Share index gained 606.82bps to close at 39,042.11 bps, after opening at 38,435.29bps, representing a 1.58% growth on a high volume that was higher than the previous day’s. Similarly, market capitalisation went up by N219.81bn to close at N14.14tr from an opening value of N13.92tr, also representing 1.58% appreciation in value that further reduced loss position of players. The market breakout of the 39,000 psychological line and is heading to the first strong resistance level of 40,150 that will confirm a long bullish run if broken to consolidate the rebound trend.
If you are hunting for the right stocks to buy on this recovery, join Investdata Buy & Sell Signal setup. We have a watch list of stocks for different investment purposes that you may position in, as the market sets for another phrase of recovery. To register and become a member send Yes or stocks to the phones numbers below. Our watch list has increased due to the lingering bear transition, take advantage of this service to buy right and sell right.
Thursday’s upturn was boosted by demand for medium and high cap stocks like Nigerian Breweries, Dangote Cement, Guaranty Trust Bank, International Breweries, Julius Berger, Stanbic IBTC, Dangote Flour, Dangote Sugar and ETI, which impacted positively on the market and turn NSE’s Year-to-Date gain of 2.09% again; while market capitalisation gain for the period stood at N532.75 billion representing 3.91% above the year’s opening value.

Mixed Sector Performance
Sectorial performance for the session were mixed as NSE Insurance and Oil/Gas were in the red, while other sector indexes closed higher in the same direction with the general market. The NSE Industrial Goods index maintained the lead as a result of price appreciation of Dangote Cement and Lafarge Africa, followed by the NSE Consumer and banking as NB, National salt, international brewery, GTBank and ETI gained in value.
Market breadth was positive with advancers outnumbering decliners in the ratio of 29:19 to continue the up market for straight four days.
Market activities were up in volume and value by 25.19% and 14.2% respectively to 492.12m shares worth N7.6bn from the previous day’s 393.12munits valued at N6.67bn, just as transaction volume was boosted by trading in financial services stocks like Wapic Insurance, Guaranty Trust Bank, Diamond Bank, FBNH and Fidelity Bank that witnessed increased trading to top the activity chart.
The best performing stocks were National Salt and Japaul that topped the advancers’ table, gaining 10.06% and 7.4% respectively to close at N22.40 and N0.29 each. This was as a result of low valuation attraction and improving earnings.
On the flip side, Eterna and Continental Reinsurance were the worst performing, losing 5% and 4.75% respectively to close at N6.90 and N1.43 on profit booking.

Market Outlook
Being the last trading day of the week, we expect the trend to slow down due to profit booking by traders from the few days rally. Volatility may continue as investors and other players rebalance their portfolios ahead of March full-year accounts, especially as equities remain undervalued with higher yields. Investors should review their position in line with their investment goals and take action as events as it unfolds in the global and domestic environment.
However, we would like to reiterate our advice that investors should go for equities with intrinsic value, especially during this season were less earnings are released ahead of march full year earnings release and Q2 interim dividend payment are expected in the market arena very soon.
We advise investors to allow numbers guide their decisions while repositioning in any stock, 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 Chart 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.

Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08032055467