Market Update for Feb 23
The market on Thursday showed more strength in the seeming recovery trend driven by medium and high cap stocks that appreciated in value during trading as the earnings reporting continued with dividend cut seen so far revealing the impact of the increasingly negative macro-economic indicators on the real sector of the economy. Africa Prudential Registrar Plc, for example, released its full year earnings report for 2016 after trading with a dividend cut of 50%, just as there was decline in revenue and profit for the period.
The government and its economic team are still foot dragging with policy statements here and there forgetting that investment is time bound and wait for no man, meaning that actions and strategic plans need reviews and infusion of new concepts to reform the economy. There is need also to urgently implement well-articulated policies backed by monetary and fiscal authorities that will bring about the structural changes to support the economy and reverse the negative macroeconomic indices and ultimately attract investment and increase national output.
Notwithstanding, the composite NSE All-Share Index gained 159.37 points to close at 25,409.06 points from an opening figure of 25,249.74 points, representing a 0.63% growth on improved volume of trades to continue the seemingly bull sentiment so far in the week’s trading sessions as investors reaction to the earnings released so far remains mixed.
Trading activities reversed Wednesday marginal decline with buying volume at 100% and selling volume of 0%, to close the day, just as market capitalisation gained N55.13 billion to close at N8.79 trillion from its opening value of N8.74 trillion, representing 0.63% growth in value.
The appreciation in Mobil, NB, GTBank, UBA, Guinness, Berger Paints and Julius Berger reduced the NSE All-Share index’s year-to-date negative position to 5.42%, just as market capitalisation for the same period adjusted down to N453.42 billion, representing 4.87% loss for the same period.
Market breadth remained negative and weak as the number of decliners outpaced advancers in the ratio of 15:13 to continue bull transition after a slow down.
The day’s traded volume and value were mixed as volume was up by 24.38% to 146.71 million shares from 118 million in the previous day while value was down to N1.75 billion against the previous valued at N1.80 billion.
Transactions in financial service stocks like UBA, Access Bank, Diamond Bank and Zenith Bank as well as Presco, dominated the activity chart as most traded equities by volume.
The NSE All-Share index and all sectoral indices were in the green except NSE Lotus, NSE Premium that were in red while NSE Insurance and NSE ASem were flat to close the day’s transaction.
At the end of the day, Berger topped the advancers log with 4.93% to close at N6.30; followed by Guinness with 4.81% to close at N68 per share. On the decliners table, Unilever led with 4.99% to close at N28; ahead of UACN, which shed 4.98% to close at N12.02 per share.
DAILY TIME FRAME NSEASI
The index on a daily time frame again seem to rebound within descending triangle chart pattern and falling channel to retrace up after forming double bottom level. At the same time, index movement refused to breakdown the 25,000 psychological lines, despite the mixed sentiment so far. The prevailing low volume traded also signals activities of the smart money, especially as the market is struggling to come out of its oversold region as the earnings season entering it peaks with surprises and disappointing numbers.
The trending ability of the market on a daily time frame is strong, as ADX is above 20 at 27.77, RSI reading 41.61 with MFI looking up to indicate that funds are entering the market.
As you watch the market, expecting the trend to remain positive, hold your position in value stocks that are likely to pay dividend. There was a cross transaction of 21 million share of Nigerian Breweries at N135 yesterday involving offshore investors, this has been the factor that kept it price up despite the dividend cut.
