November Trading Begins Positive On NSE, Amidst Lingering Volatility

Market Update for November 1

The first trading day of the eleventh month of year was highly volatile but positive to close the session higher, consolidating a bull transition that is driven by earnings performance that released at the last minutes to the market in compliance with regulatory requirements of the Nigerian Stock Exchange (NSE). Despite the mixed numbers all the key market performance indices were on the rise over the last three trading sessions on high buying pressure, irrespective of profit taking that continued on daily basis.
The day started out on slight decline that lingered to midday, reaching a low of 36,427.31 basis points before rallying back by afternoon to touch an intraday high of 36,888.04 which had been the resistant level in recent times, forming a double top that suggests pullback at this point or a break out, depending on market forces and sentiment as players- both local and international continue to digest the recent Q3 numbers, while rebalancing their portfolios to take reposition ahead of year-end.
Market technicals remain positive as the index is trading within the rising channel and above 20-Day moving average, despite the fact that volume traded remained below the recent average market traded volume and still closed on positive market breadth.
As earnings remain one of the major factors that influence equity price movements in the short medium or long-term, investors should take advantage of the strong numbers to plan their investment and target minimum return of 20% on investment between now and March 2018. Given that Nigeria has been retained in the MSCI Frontier market index and there will be minor review of the index by November 13, more fund managers are likely to be attracted into the market. One reason is that the current low Price-to-Earnings Ratio portends higher upside potentials for the nation’s equities, especially with the improving companies, market and economic fundamentals, among others to support growth.
Market volume index on Wednesday, November 1, 2017, was 0.95; buying position at 100% and 0% selling volume of total transaction, to continue the three day up market.
Meanwhile, the All-Share Index gained 206.91 basis points to close at 36,484.30 from 36,680.29 points, which represented a 0.56% growth. Similarly, market capitalisation was up N71.61bn to N12.77tr, also representing 0.56% value gain from previous session’s N12.69tr. Value gain recorded by medium and high cap stocks at the end of day impacted positively on the ASI’s year-to-date return, lifting it to 37.26%, just as market capitalisation growth stood at N3.52tr YTD, representing a 38.06% 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 23:21 on a traded volume that was marginally lower than previous day’s level to continue the bull-run.
Market activities, in terms of volume and value were mixed as volume was down by 3.76% to 249.35m million shares from the previous day’s 259.08m units, while value was up by 70.32% to N5.2bn from Tuesday’s N3.01bn.
Transactions in the shares of FBNH, Sterling Bank, Diamond Bank, Stanbic IBTC and Fidelity Bank topped the volume chart.
At the close of trading, Berger Paints and FBNH topped the advancers’ table, gaining 5% respectively to close at N7.35 and N6.51 per share, on the back of market forces, followed by Presco’s 4.99%, to close at N69.98 on fair Q3 numbers.
On the flipside, Newrest ASL shed 4.95% to close at N7.11 on market forces and profit taking; followed by Vitafoam which lost 4.04% to close at N2.85 per unit on profit taking.
During the trading session, eight companies released their quarterly earnings reports, including Presco, Union Diagnostics and Northern Nigerian Mills.

As the market opens this morning, expect volatility to continue due to portfolios rebalancing and repositioning by market players along the line of impressive earnings and surprising numbers ahead of year end, October PMI, Q3 GDP and the trading cycle.
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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