Market Update for June 7,
Nigeria’s equity market on Wednesday resisted further decline as investors repositioning increased to retrace up from the previous day pullback on a high volume of trades as revealed by volume index of 1.14 with a buying position of 100%, while selling volume was 0% of the day’s total transactions.
This up and down movement in the market is normal in any recovering market, but the investing public should understand how to invest in different market cycles, as well as know characteristics of the bear and bull market at any time to successfully manage risk and invest profitably.
Despite the oscillating price of oil in the international market, Nigeria’s improving daily production output is a plus for its economy as this will boost government revenue to fund the budget, despite the delay in signing of the 2017 Appropriation Bill into law. With some companies releasing their closed period for the anticipated earnings reports, it is a pointer that as from next week when inflation figures are likely to be released, the scorecards of companies with March year-end would start rolling in to support market fundamentals, especially if the numbers are positive and beat market estimates.
Meanwhile, the benchmark index for the day gained 486.34 basis points to close at 32,686.72, after opening at 32,200.38 points, representing a 1.51% growth on a bullish sentiment and high volume traded, but it was lower when compared to previous day’s transaction level. Similarly, market capitalisation rose N168.13 billion to close at N11.30 trillion, from an opening value of N11.13 trillion, representing a 1.51% appreciation in value.
The upturn in share prices of Dangote Cement, International Breweries, Forte Oil, Seplat, 7UP, Total, UBA, Flourmills, Access Bank and Oando impacted the All-Share index positively to boost the year-to-date return to 21.63%, while market capitalisation for same period stood at N2.26tr, representing a 22.20% appreciation above the year’s opening value.
Market breadth for Wednesday was flat and weak as the number of decliners outpaced advancers in the ratio of 26:27 on high volume of trade to reverse the down market.
Market activities in terms of volume and value were down by 33.00% and 37.57% respectively to 499.11m shares from previous day’s 744.99m shares and N4.07bn, compared to previous day’s N6.52bn. Transactions in the shares of FBNH, UBA, DIAMOND BANK, FIDELITY BANK and ACCESS BANK topped the volume chart to close the day’s trade.
At the end of the trading session also, International Breweries topped the advancers’ log with its share price gaining 10.22% to close at N26.58per share, on its proposed merger with two other subsidiaries of its parent company- SABMiller, as well as its expected full year earnings report. It was followed by Forte Oil with a 10.20% gain to close at N52.92 per share on the back of the interface of market forces.
On the flipside, FBNH led the decliners’ log, dropping 9.75% to close at N6.40 also on profit taking; while UBN followed with 5% to close at N5.78 each on profit taking.
As market opens this morning, expect mixed action of profit taking and repositioning in value stocks to continue, which means investors should not panic if they take position based on strong numbers and future prospects of any stock.
Again, we advise that investors allow numbers to guide their decisions to reposition for the rest of the year’s trading activities, especially now that prices of stocks are looking up ahead of recovery economic fundamentals, if the numbers will support the price reversal or continuation.
It is time to use your technical tools to take decision by knowing the support and resistant level to reposition or exit any position.
Once more, at the risk of repeating oneself, we must reiterate that industry potential is very important when picking a stock, because there are factors that are sector-specific and would naturally impact positively or negatively on companies operating within such an industry, especially now that the economy is recovering. Invest wisely and sign up for investdata buy & sell signal setup and the upcoming Traders & Investors workshop call 08032055467 and 08111811223