NSE Indices Up 0.81%, As FG, CBN Move To Resolve System Illiquidity

Market Update for April 5

Trading activities on the floor of the Nigerian Stock Exchange on Wednesday soared on positive sentiments to halt the three trading sessions of bear-run as investors go the way of numbers and future growth prospects in taking position ahead of Q1 earnings report and economic data that will give the true position of things in the economy and confirm the path we are headed.
It is true that the delayed passage of the 2017 budget will slow down the implementation of the Federal Government’s Economic Recovery Growth Plan that was launched on Wednesday by President Muhammadu Buhari.
However, the injection of almost N800 billion into the financial system by way of refund from the Pairs Club deductions to states and payment of N54 billion to offset backlog of pension liabilities will improve the wellbeing of beneficiaries and indeed the general economy.
When you add this to the continued efforts of the Central Bank of Nigeria (CBN) to fund the foreign exchange market by way of interventions, which also is expected to have more positive impact on the system, the illiquidity in the system would be considerably addressed.
The apex bank will also in the process consolidate its efforts by fashioning out a single exchange rate that will attract foreign investments to boost the nation’s external reserve, while supporting appreciation in the value of the Naira.
The major stock markets of the world closed in positive region, ahead of Thursday’s meeting of two world economic leaders to discuss issues relating to trade, recent missile test and others.
As if to confirm the superlative nature of global economic activities on Wednesday, oil prices jumped amidst pointers to a gradual tightening in the market. Brent crude traded at $54.48 a barrel, 0.57% higher, WTI was sold at $51.38, 0.69% higher. But the mixed global Purchasing Managers Index (PMI) is still a concern for investors.
Meanwhile, the composite Nigerian Stock Exchange (NSE) All Share Index gained a strong 205.54 basis points to close at 25,417.68, after opening from 25,266.15, representing 0.81% growth on a low volume traded, when compared to the previous day’s figures as the volume index was 0.66 with buying position of 100%, while sell volume for the day was 0%. Similarly, market capitalisation for the day was up by N71.12bn to close at N8.81tr, from an opening value of N8.74tr, representing 0.81% appreciation in value.
Significant increase in the value of Mobil, Lafarge Africa, 7-Up, Access Bank, Forte Oil, Zenith Bank and UBA for the day reduced the All-Share index’s year-to-date negative position to 5.22%, just as market capitalisation adjusted to N433.42bn, representing 4.71% loss YTD, from the opening value.
Market breadth for the day was positive and strong as the number of advancers outpaced decliners in the ratio of 25:15 to reverse the three days of bear run. Market activity in volume and value were down by 11.94% and 30.25% respectively to 158.71 million shares from 180.22 million shares in the previous day and N1.13bn from the previous value of N1.62bn respectively. The volume of transaction was driven by shares of Fidelity Bank, Zenith Bank, UBA, Guaranty Trust Bank and Transcorp that dominated the day’s trading as most traded equities by volume.
The NSE All-Share index and all sectoral indices were in the green to close the day’s trading.
During the session, more of 2016 full year financials were released, just as a few others filed for delayed submission of their 2016 financials.
Mobil led the advancers log with 10.25% to close at N347.28, driven by dividend offered and the entrance Nipco, its new core investor, followed by Lafarge Africa with 10.23% to close at N47.62; while Transnationwideexpress topped the decliners log, shedding 8.08% to close at N0.91, followed by Fidson Healthcare with a 5% dip to close at N0.95.
We advise that investors allow numbers to guide their decision in repositioning for Q2 as the first quarter earnings reporting season is just kicking off. Industry potential is very important when picking a particular company, because there are things that are sector-wide and would naturally impact positively or negatively on companies operating within that industry.