Reversal Imminent Ahead Of Quarter-end Portfolio Rebalancing, MPC Meeting

The stock market started the week on Monday very volatile, closing flat, as the day started out with a gap up which was sustained from the mid-morning till noon before a reversal due to the intra-day profit booking in banking stocks that plunged the index in the closing minutes. This pull was strong enough, forcing the session to close marginally lower.
Trading in recent days have formed a double bottom, but continues to side-trend at 38.2% Fibonacci retracement level which suggests that the market is resisting to breakdown this major support despite the mixed sentiment in the trading arena. The NSE index has retested this level in the last four trading sessions, trying to retrace up on a mixed volume of up and down movements. Bottoming out of the Nigerian Stock Exchange’s All-Share index is imminent, especially as investor sentiments are strengthening, as the earnings reporting seasons reaches its peak this week, just as the first quarter ends and the filings are expected by the end of April.
During Monday’s trading session also, the index hit intraday highs of 41,662.40 basis points in the afternoon before the pullback to the low of 41,454.30 at which it closed the day. This resulted from value loss by the combination of Guaranty Trust Bank, Seplat Petroleum Development Company, Unilever, Forte Oil and Lafarge Africa.
The mixed market technicals for the day supports rebound in Tuesday’s trading sessions, the low traded volume on a selling pressure of 100% with positive market breadth, equally signals the impact of high dividend attraction for investors who are taking advantage of the markdown dates to position and move their funds for dividend income, considering the high yields in the short-term. Volume index was 0.82 with money flow index momentum looking up at 38.85 points, slightly better than previous day’s 38.37 points.
Meanwhile, the composite index NSEASI shed 17.80 points to close at 41,454.30 basis points after opening at 41,472.10bp, representing a growth of 0.04% on low traded volume that is lower than the previous day’s. Similarly, market capitalisation for the day lost N5.97bn to close at N14.98tr from an opening value of N14.98tr which also represented a 0.04% value loss.
The downturn was as a result of price decline among the low, medium and high cap stocks which slight impacted negatively on the NSE’s Year-To-Date returns, to contract at 8.40%, just as market capitalisation gains for the period stood at N1.37tr, representing a 10.04% YTD growth.
Market and sectorial performance were mixed, as the benchmark index and other market indices closed lower, except for the NSE Insurance and NSE Consumer Goods that closed higher. Market breadth for the day was positive as advancers outweighed decliners in the ratio of 34:17, while market activities were down in volume and value by 32.17% and 24.08% respectively to 379.93m shares, worth N5.13bn from the previous day’s 560.12m units valued N6.76bn.
Transaction volume was boosted by financial services, conglomerates and oil stocks like: Access Bank, Zenith Bank, UBA, Transcorp and Japaul Oil, which witnessed increased trading to top the activity chart.
Custodian & Allied Insurance and GSK were the day’s best performing stocks, as they topped the advancers table, after gaining 10.00% to close at N4.51 and N28.05 respectively on the back of their strong dividend yields, while Forte Oil and Royal Exchange Assurance came out worst after losing 9.09% and 6.06% to close at N40.00 and N0.31 respectively on market forces and sentiments.
During the trading session, Chemical & Allied Products, Okomo Oil Palm and MRS Oil released their 2017 full year results, proposing N2.03, N3.00 dividends and 1:5 bonus shares respectively.

Market Outlook
We expect a reversal on the strength of end of the quarter fund managers trading account balance, expiration of 90-day statutory period to release December 31, year-end account which will result to more earnings reports to the market, ahead of first quarter economic data and corporate earnings to give the state of the economy and the companies so far in 2018. Even as more income investors take position in value and dividend paying stocks, alongside bargain hunters. As MPC meeting holds next week to give direction of the interest rate that will drive the economic recovery and inflow of funds.
Also, expect repositioning to continue, while profit taking will reduce on the strength of expected payouts and earnings surprises.
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.
Get your home study pack of the INVEST 2018 Traders & Investors Summit and ride with the current recovery on Nigeria’s stock market and economy, thereby ensuring that you invest and trade with knowledge. You can also access stocks analysed in the home study pack of the Chart Summit held on February 24, 2018, including the 15 stock-picks for 2018 are available now to guide your positioning as trading for the year.
Comprehensive training materials on stock Trading and Investing for Financial Independence series are Available, you can play and watch on your mobile phone, laptop, desktop and TV set. Kindly call or send yes to 08032055467, 08028164086 or 08111811223.
We say big thanks to all the participants and resources persons that made Investdata Investment education workshop debut in Port Harcourt a success. The trading and investing education train move to Abuja on April 14, 2018.

Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08032055467