NSE Rebounds, As Investors Position For Q1 Earnings, Data

The equity market on Thursday had a nice follow-through session, particularly early when the composite Nigerian Stock Exchange All Share index gapped up in the morning as investors take advantage of the low prices. It pulled back at midday after making intraday higher highs of 40,945.75 from its lows of 40,648.52 on a high volume traded, amidst an improved investors’ sentiment to halt the lingering down market.
The index retracement from the previous day low after the outcome of Monetary Policy Committee (MPC) meeting was successful, however, and it rallied back to retest the recent highs again. It could not however get through to breakout the psychological line of 41,000, before closing the day at 40,875.69. The index, nonetheless, successfully held on to more than half of the gains to closed on the green side.
The market seems to have settled in to the fact that after months of uncertainty, this week’s meeting of the Central Bank of Nigeria’s MPC has given a direction of interest rate as a market stimulus for the economy and the financial market. This is expected to guide the flow of funds in the money and capital market till the next meeting.
The declining rates in the money market is likely to support more flow into the equities market as average dividend yield remains above 4.42% in the shortest time for fund managers to play around. This is especially as the just concluded 2017 earnings season has revealed greater inherent values of the companies ahead of their 2018 Q1 corporate numbers being expected in the market any moment from now. Ahead of the release, more companies have continued to notify the investing public of their closed period when investors their directors and key officals are barred from trading in the company’s shares, thereby taking advantage of price sensitive information at their disposal.
The market technicals, for the day were strong but mixed as traded volume was high on a strong buying pressure of 82%. Market breadth, however was flat, with market sentiment strengthened going by the increasing demand for stocks as revealed in the buying position of 82% against selling volume of 18% on a volume index of 0.89 of the day total transaction. Money flow index turn up to indicate entrance of more funds into the market at 31.35 points from the previous day’s position of 23.54 points.

Index and Market Cap

The day All Share Index gained 125.83 points, closing at 40.875.69 basis points after opening at 40,749.86bp, representing a 0.31% growth on a volume higher than the previous day’s. Similarly, market capitalisation for the day was up by N45.45bn to close at N14.77tr from an opening value of N14.72 trillion, representing 0.31% value gain that will help investors reduce their loss.
Thursday’s market upturn was attributed to price appreciation by medium and high cap stocks, despite profit taking in some equities. This impacted positively on the NSE’s Year-To-Date returns, as it inched up to 6.88%, just as market capitalisation gains for the period stood at N1.17tr, representing 8.50% above the year’s opening value.

Positive Sectoral Indices
Sectoral performance for the day was positive along the line of the general market index, except for the NSE Consumer Goods that closed red owing to sell-offs in NB, International Brewery and Dangote Sugar.
Market breadth for the day was almost flat as decliners outnumbered advancers in the ratio of 22:21.
Market activities were up in volume and value by 23.5% and 13.3% respectively at 495.61m shares worth N7.71bn, up from the previous day’s 401.41m units valued at N6.77bn.
Transaction volume was boosted by financial services stocks like: UBA, Fidelity Bank, Guaranty Trust Bank, Access Bank and FBNH, which witnessed increased trading to top the activity chart.
Prestige Assurance and Lasco Assurance were the best performing stocks, topping the advancers’ table after gaining 9.30% and 5.56% respectively to close at N0.47and N0.38 each. This was due to market forces and the four kobo dividend proposed by directors of Lasaco.
On the flip side, GSK and Jaiz Bank were the worst performers, after losing 9.61% and 8.11% to close at N31.50 and N0.68 respectively on profit taking.

Market Outlook
We expect the ongoing volatility and improving positive investor sentiment to continue, as bargain hunters take advantage of low price to position ahead of Q1 scorecards and economic data. Even so, value investors continue to position for the short and long term on the strength of company fundamentals.
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.
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Abuja Workshop
Theme: “The Power of Fundamental and Technical Analysis In Protecting your Capital In Pre-Election Year and Beyond”, holding on 14th April, 2018.

You would learn from our team of experts/analysts:
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Ambrose Omordion
CRO|Investdata Consulting Ltd

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