Market Update for the week ended Jan 27 and Outlook for Jan 30
The Nigeria stock market closed the last full trading week of January on a positive note to continue the oscillatory mood arising from mixed sentiment resulting from the Santa Claus profit booking, January effect, dwindling confidence as macro-economic indices remained negative and a source of serious concern to local and foreign investors with the government and its economic managers yet to provide clear economic policies that would put the economy in a recovery path in all of 18 months.
The decision at last week’s Monetary Policy Committee meeting of the Central Bank of Nigeria (CBN), to retain the benchmark rates, according to Godwin Emefiele, the apex bank chief’s chief who chaired the meeting, was as a result of the unstable global and domestic economic outlook, which now require structural reforms and enhanced fiscal policy to boost the nation’s economy again.
Meanwhile, the composite NSE All-Share index gained 104.68 points, closing at 26,328.22 points, after opening from 26,223.54 points, representing a 0.40% growth, on relatively low volume of trades to reverse previous week’s bear transition.
Similarly, market capitalisation for the period closed higher at N9.05 trillion from an opening value of N9.02 trillion representing 0.40% appreciation in value.
Buying volume of total transactions for the week was 87%, while selling position was 13% to signal smart money accumulation in the market.
Despite the volatility in the first month of the year, the market’s performance so far is better than in the same period of 2016 when the NSE’s index the worst performing in the world.
Last week’s gainers table was dominated by low, medium and high cap stocks with only few having capacity pay dividend in the forthcoming earnings season.
In any case, last week’s marginal gain reduced the NSEASI’s year-to-date negative position to 2.03%, just as capitalisation equally adjusted up for the same period to a loss of N187.92 billion.
Market breadth for the week was flat, as 29 stocks appreciated in value while 30 depreciated value during the period.
Global markets during the week were mixed, with the US market indicators closing higher on improving economic outlook as revealed by leading economic indicators that rose by 0.5% in December. At the same time, the country’s GDP was up by 1.9% in the fourth quarter. Consumer confidence has soared since President Donald Trump was elected in November last year, hitting a 13-year high in December, according to Conference Board. The impressive earnings hitting the market pushed the DOW-Jones Industrial Average above 20,000 for the first time ever.
Japanese Nikkei and Germany‘s DAX closed higher, while Britain’s FTSE 100 was down, as the court order that parliamentary voting on the Brexit decision must come first before any further move to activate the process of exiting the European union. There is also the issue of UK not being able to make trade deals until at least 2019. Although the UK’s Purchasing Managers Index (PMI) was up in December, the British pound is down against dollar.
Japan’s core consumer prices fell by 0.3% which is the slowest pace for the first time in four years, this could be a blow to the central bank’s efforts to boost the economy.
Back home, the NSE All Share Index opened the week, on a marginal gain of 0.03%, which was short-lived on the second trading day, when it lost 0.05%, but was reversed at the midweek trading session to record a gain of 0.09% and it continue in that direction on Thursday and Friday closing higher at 0.19% and 0.15% respectively, bringing the week’s gain to 0.40%.
The NSEASI and all sectoral indices for the period were up, except the NSE Premium index that was down by 0.13% and NSE ASem that closed flat. This was attributed to improved demand for stocks as market players balance their trading account.
Market transaction levels for the week, measured by aggregate volume was down by 26.19%, while value of trades for same period rose by a significant 111.46%. This was in contrast to the closing levels of previous week. In the week under review also, a total of 990.58 million shares valued at N18.82 billion were traded in 14.917 deals, compared with 1.34 billion shares worth N8.90 billion, exchanged in 15,733 deals in the previous week.
During the week also, Unity Bank and Oando led the advancers’ table with 15.63% and 12.47% respectively, while the flip side was topped by Honeywell Flour and MRS, which suffered 11.29% and 8.24% decline respectively.
In the course of the week, manufacturers- Guinness Nigeria and PZ Cussons, as well as Redstar Express released quarterly earnings reports with mixed performance.
Market Outlook
The market is likely to experience mixed performance, as profit taking and new positioning for the earnings season will keep the trend up and down. However, in our opinion, the volatility in the market may have caused some stocks to trade at valuations lower than their estimated fair values after considering fundamentals.
Economic data and earnings reports are expected to be few this week.
Again, the time to combine technical and fundamental analysis for your trading decisions is now, knowing the support and the resistance levels.
Train yourself and study to know the new approach to adopt at this point and going forward.
To join our webinar every Friday 8pm to 9pm, WhatsApp group and get market updates, SMS web*name*email to 08124050850
STOCKS TO WATCH
Aiico, Total, Fcmb, Presco, Zenith Bank, UBA, and FO
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