Portfolio Rebalancing, Profit Taking Continue, As Investors Await More Economic Data

Market Update for November 7

The nation’s equity market had a mixed session on Tuesday to continue its volatility, reversing previous down session as investors reposition on the strength of earnings power, news and expectations continue to attract attention to interim dividends declared recently. Those also under the radar of investors and traders include low price stocks, undervalued equities with strong earnings that are trending up, as well as those with strong potentials as the economy and market fundamentals inspire hope for a brighter tomorrow.
The trading session opened with marginal gain in the morning, oscillating in the midmorning to afternoon, touching intraday high of 37,063.04 to breakout the 37,000 resistance level from the day low of 36,907.07 after which it finally closed the day higher. The underlying technicals were good and positive, particularly on the NSE All-Share index, NSE Banking and NSE Industrial good, which were trading above their 20-Day moving average, MACD was positive, money flow index looking up and RSI above 50 at 63.
As hinted in our update yesterday, the market broke out, but with weak momentum, following which mid-week’s market sentiment and forces will give real direction as trending ability remain weak since ADX is below 20 at 13.38.
The presentation of 2018 budget of consolidation should be a plus for the market if only the government will change its style of implementation and disbursement of funds to hasten the execution process so that these infrastructural developments will drive the economy and positively impact the life of the people. We would not however feign ignorance of the fact that government has consistently underperformed in terms of its revenue projections, since the need to further plug leakages and check wastages, while concentrating on projects with value-adding propositions in terms of generating employment directly and indirectly, and driving economic growth and development.
We would not however fail to place on record also the fact that the budget for the current fiscal year, as well as the one before it did not, to a greater extent, successfully reflect in the life and wellbeing of ordinary Nigerians across the length and breadth of the country. It is true that the emerging economic data are good, showing improvements, just as the corporate earnings, yet there is serious poverty and suffering in the land, resulting in threats, insecurity and crime here and there.
In a presentation titled “Overview of the landscape of financial access in Nigeria, Enhancing Financial Innovation & Access (EFInA) noted at a recent workshop that 40.1m or 41.6% of Nigeria’s 96.4m adult population do not have access to formal financial services. This was blamed on the difficult economic times, “as many individuals consider their dwindling cash inflows too small to justify using a bank account.”
Increase in unemployment resulted from many companies shutting down, “leading to smaller disposable incomes across many households. In addition, many individuals that had bank accounts in the past closed them when situations got tough as they were unable to spare any funds to keep in the bank.”
It is time for government to undertake a review of its reforms policies, implementation style, as well as the membership of the economic management team, so that this budget of hope would boost the recovery and touch the life of the people through speedy execution of projects.
Meanwhile, the bull sentiments returned yesterday as revealed by buying pressure of 68%, on a volume index of 1.09 and selling position was 32% of total transaction, to reverse Monday’s bear session.
At the close of trading, the All-Share index gained 82.74 basis points to close at 37,013.57 from 36,930.83 points, representing a 0.22% growth, in the same direction as market capitalisation which was up by N28.64bn to close at N12.81tr, representing 0.22% value gain from previous session’s N12.78tr.
The rise followed price appreciation by medium and high cap stocks like Dangote Sugar, FBNH, Dangote Cement, Zenith Bank, Guaranty Trust Bank, Total Nigeria, UBA and Guinness Nigeria which impacted positively on the ASI’s year-to-date return, to 37.73. Also, market capitalisation growth YTD stood at N3.56tr, representing a 38.54% rise over the year’s opening value.
Market breadth for the day remained positive as the number of advancers’ outpaced decliners in the ratio of 23:17 on a high traded volume that was lower than previous day’s level to halt bear.
Market transactions, in terms of volume and value were mixed as volume was down by 34.59% to 305.17m share from Friday 466.52m units, while value appreciated marginally by 0.09% to N2.91bn from the previous day’s N2.90bn.
Activities in the shares of Diamond Bank, Fidelity Bank, Cadbury, FBNH and Meyer topped the volume chart.
At the end of the day trading session, Diamond Bank topped the advancers’ table, gaining 5.17%, to close at N1.22 per share, on the back of plans to divest its West African subsidiaries, thereby positively impacting its book. It was followed by University Press, which notched 4.80%, to close at N2.84 on market forces and improvement in its Q2 numbers.
On the flipside, International Breweries, shed 9.29% to close at N41 on profit taking; followed by the 5% drop in the price of Linkage Assurance, to close at N0.76 per unit on profit taking.


As the market closed on a good technicals on Tuesday, we expect volatility to continue on the strength of portfolio rebalancing, profit taking and repositioning in the earnings power, market news and expectations ahead of economic data and year end changes as crude oil hit a two-and-half year high to close at $60.
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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Sub Topics
The Pre-election Economy & 2018 Budget: Implementation and Impact On the Recovery Bull Market
In this presentation, Razaq Abiola, a seasoned analyst will Review the Economy and impact of government policies so far, discussing how the proposed N8.6tr budget will influence the economy in pre-election year. He will also take participants through the outlook for the stock market in 2018. He would attempt to answer a question like: Is there really anything to cheer from the mere size of the 2018 budget, considering how those of the past two years have been implemented, especially during the economic recovery phases?
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Comprehensive Earnings Guide for Investing and Trading in 2018 Earnings Season Profitably
“Equity price movement is a function of earnings in the short run and long term,” market reaction to earnings in any market cycles is prolonged by dividend payout, relative to price. It makes a lot of sense to trade in the direction by knowing the companies that will grow their payout in 2018… as long as you identify such stocks in their early stages. Hindsight, as they say, earnings calendar, trend, surprise and quality of numbers are very useful in making profitable investment decision in 2018 and beyond.
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Discover how to Trade Smarter, How You Can Stay on the Right Side of the Market Most of the Time, as well as specific, high winning probability, chart patterns Trading Price Direction based on Momentum Flows, The current market cycles, how they are used for trading price direction, in addition to How to set realistic & achievable profit.
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CRO | Investdata Consulting Ltd

Tel: 08028164085, 08032055