Nigerian Bourse Looks To Market Forces For Next Direction, Amidst Hope For More Numbers

Market Update for March 12, 2018

Trading on the Nigerian Stock Exchange on Monday remained very volatile to close lower on a huge traded volume as the market seemingly ignores the positive and impressive earnings being released by quoted companies repeatedly. This is like a confirmation of the belief by INVESTDATA that the numbers emanating today have since been priced into the stocks before now, especially during the rally that began in the closing months of 2017 and way into January 2018, in reaction to the Q3 reports. It may also be a sign that even the technical corrections in February that kept the market in the up and down movement during the peak of earnings season has not change their minds about the stock valuations.
Besides the circular by the Central Bank of Nigeria (CBN) giving conditions that qualify the nation’s banks for dividend payment, based on their exposure to Non-Performing Loans (NPL), there have also been reports by Moody’s and the International Monetary Fund (IMF) that have triggered negative sentiments for banking stocks. The sector is the most capitalised on the Nigerian bourse and influences the general stock market directly and indirectly.
Although the NSE Index ended Monday on a negative note, the NSE Insurance and NSE Oil/Gas closed higher. The day started out with a little upside movement, and then pulled back, steeply so, by the mid-morning session, before retracing up between the midday to afternoon, touching intraday highs of 43,228.41 from lows of 42,943.34. The index thereafter retraced back above the 43,000 level on a negative market breadth.
Technically, the market was weak on Monday.
When market is down on a huge volume such as this, it is a sign of bearish trend. But then, going by the high volume seen in FBNH (READ) arising from a cross deal by two dealing firms, which helped to significantly lift transaction volume, market forces will on Tuesday confirm the next direction of the market as more numbers are expected.
It must be noted that the huge transaction volume notwithstanding, the composite NSE’s All-Share index is still trading above the short moving average of 20 and 50-day.
During the day’s trading, there were buying pressure of 40% on a huge volume traded, while selling position was 60%. Volume index was 2.24 with money flow index energy strengthen for the session at 65.71 point from the previous day’s level of 65.06 points.
At the close of trading, the All Share index shed 111.36 points to close at 43,056.51 after opening at 43,167.87 basis points, representing a decline of 0.26% on high traded volume that is higher than the previous day’s. Similarly, market capitalisation for the day lost N105.36bn to close at N15.4tr from an opening value of N15.51tr which also represented 0.68% value loss.
The downturn was attributed to price depreciation by stocks like: UBA, Guaranty Trust Bank, FBNH, Unilever, Dangote Flour, Guinness, UBN, Cadbury and Nestle, which together impacted negatively on the NSE’s Year-To-Date returns, cutting it to 12.59%, just as market capitalisation gains for the period improved to N1.8tr, representing 13.18% YTD growth.
The All-Share index and other sectorial indexes closed red, except for the NSE Insurance and NSE Oil/Gas that were in green for the day due to price appreciation in Consolidated Hallmark insurance, Unic, Royal Exchange Insurance, NEM and AXA Mansard, rally in Total Nigeria. Market breadth was negative as decliners outnumbered advancers in the ratio of 34:19.
Market activities were down in volume and value by 94.2% and 96% respectively to 831.39 million shares worth N10.57 billion from previous day’s 1.54 billion units valued at N19.71 billion.
Transaction volume for the day was boosted by financial services and oil stocks like FBNH, Zenith Bank, Japual Oil, Regency Insurance and United Capital which witnessed increased trading to top the activity chart.
The top performing stocks were Unic Insurance and Multiverse, which gained 9.52% and 7.69% respectively to close at N0.23 and N028 on market sentiment, while Regency Insurance and Diamond Bank were the worst performers, shedding 5.71% and 4.87% to close at N0.33 and N2.15 respectively on market forces and profit booking respectively.
During the trading session on Monday, 7-Up Bottling Company was officially delisted from NSE’s Daily Official List, while Zenith Bank and Mcnichols Plc released their 2017 full-year earnings reports. Zenith Bank’s numbers were not only impressive, but beat market expectations and offered a final dividend of N2.45, which brings its total dividend for the year to N2.70 per share, a level that may be difficult to match by peers (READ).

Market Outlook

We expect the positive sentiment to resurface again after yesterday’s pullback, on the strength of more impressive scorecards to hit the market on Tuesday and the days following till the end of the week. 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 payouts 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’s 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, 08032055467