Market Update for the week ended May 5 and Outlook for May 8- 12

The first trading week of May was bullish as demand for equities increased on the strength of improved numbers presented by listed companies that are expected to boost the market’s fundamental going forward, even as liquidity is likely to improve with the business environment in recovery mode, a situation that will expectedly result to increased productivity.
This is expected to support earnings when figures for subsequent quarterly results are released, thereby keeping stock prices up, despite the intermittent pullbacks as a result of profit taking, a factor that cannot be wished away as an integral part of any recovery market. This suggest that traders should keep their gaze on the market and trade with technical tools to properly time the market and know the support and resistant levels and in the process, guide their entry and exit of any trade position.
In the same way, investors with medium and long term investment perspective should also keep their eyes on the strong earnings by companies that are currently undervalued to position for long-term gain.
If the expected liquidity in the economy is to happen soon, the National Assembly should hasten the passage of the 2017 Appropriation Bill to enable the nation’s economic managers implement the Economic Recovery and Growth Plan (ERGP) as couched and presented by the Muhammadu Buhari administration some months ago. It has been noted before now that the plan, while helping to quicken the nation’s recovery from recession to a period of growth and development, would complement the several interventionist efforts of the Central Bank of Nigeria (CBN), one of which is working on the supply side of the nation’s foreign exchange market and sustain. These in addition to the strong corporate earnings will boost the Nigerian stock market and economic fundamentals that will boost local and international investor confidence.
Meanwhile, the composite NSE All-Share Index for four days trading week gained 477.12 points to close at 26,235.63.points, from an opening figure of 25,758.51 points, representing a 1.85% growth on high volume of trade. The growth was marginal, considered against previous week’s level to reverse the two-week of down market. In the same vain, market capitalisation for the period closed higher at N9.07tr, from an opening value of N8.91tr, representing a 1.75% value gained by investors.
The week’s advancers log was dominated by low stocks as investors and traders reposition their portfolio along the line of value and new trend as Q1 results give direction in expectation of better economic data to support the recovery.
Higher stock prices during the week further reduced the NSEASI’s year-to-date negative position to 2.38%, just as market capitalisation decline YTD fell to N180.62bn, representing a 1.93% decline from the year’s opening value.
Market breadth for the week was positive and strong as the number of advancers outpaced decliners in the ratio of 43:16 on a high volume of trades that were bullish, due to positive sentiments for stronger numbers that drive high demand for stocks. This is coming at a time when economic data are supporting the recovery in the nation’s economy.
Banking stocks remain the toast of investors due to their impressive first quarter earnings numbers that were made available in last trading week of April, which were above market expectations, not minding the fact that they were released relatively late.
Meanwhile, stocks markets around the world were mixed over the past week to close higher, despite the downturn in oil price and cautious trading by investors, blamed on the conflict in North Korea. Also, the political risk in France has reduced, as presidential election came to conclusion last weekend with Emmanuel Macron leading the polls. Tax and healthcare reforms of President Trump has forced many international investors trade with caution as interest rate hike policy of the Feds has not given a clear direction
Japan’s Nikkei, Germany‘s DAX and Britain’s FTSE 100 were up for the week, while US market indexes were mixed, despite the positive employment data that was released showing unemployment rate of 4.4% which is the lowest in one year. There were also significant gains in healthcare, social assistance, hospitality and professional service. This gains reflected on US 0.7% first quarter GDP growth.
In Europe, stock prices were up as France wraps up its presidential election that will chart a new direction for its economy and the zone at large. The successful election is expected to boost the zone economy growth and gaining momentum, despite the UK’s ongoing moves to exit from the Euro Zone.
In Asia, the risk of conflict in North Korea seem to be decreasing and Japanese equities recovered but some risk remaining has made investors to stay back from the market.
Back home, the benchmark index opened the month and week on a positive note gaining 0.80%, which was sustained in the following trading session with 0.58% gain and rest of the trading days with 0.19% gain on Thursday and 25% increase on the last trading session of the week to bring a total gain of 1.85% on a strong demand supported by positive sentiment for earnings and recovery economy.
The composite index and all sectoral indices for the period were in the green, except for NSE Insurance and NSE Industrial that were down by 0.09 % and 1.04% respectively to close the week.
The week’s total transaction, measured by aggregate volume and value were mixed as volume declined by 13.53% to 1.15bn shares from 1.33bn units in the preceding week, while value for the period was up by 7.97% from N9.67bn to N10.44bn in the previous week.
During the week, the share prices of Consolidated Hallmark Insurance, AXA Mansard Insurance and Infinity Trust Mortgage Bank were adjusted for dividend recommended by their directors at the end of the 2016 financial year.
Smart Product and Union Diagnostic released their full year earnings reports for 2016. Also AG Leventis, Interlinked Technology and Union Diagnostic equally made their Q1 results available to the market. At the same Beco Petroleum PLC, MTECH Communciation PLC , MTI PLC and UTC were officially delisted from the exchange’s Daily Official List.
Fidson Healthcare and Oando led the advancers’ log for last week, gaining 43.64% and 24.05% respectively to close at N1.58 and N7.17, driven by low price attraction and market forces, while the flip side was topped by Unity Bank and Champion Breweries, which suffered 13.79% and 8.94% slide to close at N0.50 and N2.14 each respectively.
Market Outlook
The market this week is likely to look down as short term profit taking hit the market with no external forces to push price in form of earnings this period, except by the mid-month when inflation figures will be release by National Bureau of Statistics (NBS).

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