Volatility To Continue As Investors, Traders Take Profit, Reposition for 2018 Earnings Season

Market Update for December 18

The nation’s stock market recorded another decline on Monday, reversing previous session’s gains on a continued volatility to start the trading week on a huge volume of trades driven by large capitalized stocks, particularly the increased activity in Dangote Cement over the past one year and six months. This should ordinary attract the attention of discerning long-term and dividend income investors, especially as improvements in profit level and expansion of capacity within and outside Nigeria continue. This is a pointer to the fact that investors have seen value, considering that institutional players and foreign investors entrance into the company.
The November inflation figure released on Monday by the National Bureau of Statistics (NBS) was flat as expected at 15.90%, from 15.91% in October due to relatively high price of food and other core products/services for the period ahead of the ongoing yuletide season. Also noticeable in the inflation data is the fact that it has been declining marginally over the past 10 months helped by the Central Bank of Nigeria’s continued intervention in the foreign exchange segment of the inter-bank market, which has kept the impact of imported inflation in check, despite the infrastructural problem-induced cost of production, which had not made the decline very meaningful. This has consolidated the positive economic data released so far that confirm the economy is still on the path of recovery and growth that will sustain the market volatility till 2018.
Monday’s market technicals was mixed with breadth at its equilibrium, volume on the increased and index declining on a selling pressure of 86% and buying volume of 14% on a volume index of 0.42 of the total day transaction. This is outside the one cross deal involving 549.97m shares of Dangote Cement at N225.68 each.
Trading for the day started on a losing note, which was reversed by the mid-morning to rally and pullback to close lower after touching intraday high of 38,486.26 and low of 37,871.65.
Meanwhile, the composite NSE All-Share Index shed 478.12 basis points to close at 37,957.96 from the opening 38,436.08 points, representing a 1.24% decline. Similarly, market capitalisation was down by N170.15bn to close at N13.51tr from an opening value of N13.68tr, representing 1.24% value loss in investors’ position.
The downturn recorded was as a result of losses suffered by high cap stocks like Dangote Cement, Access Bank, Zenith Bank, Flour Mills, Dangote Sugar and Stanbic IBTC.
This impacted negatively on the year-to-date return of the All-Share index, reducing it to 41.24%, just as YTD growth in market capitalisation reduced to N4.21tr, representing a growth of 45.63% above the year’s opening value.
Market breadth for the day was flat as the number of decliners and advancers were equal in the ratio of 19:19 on a huge traded volume that was higher than last Friday level.
Activities in terms of volume and value were up by 76.86% and 1295.09% respectively to 752.11m shares worth N127.93bn from previous day’s 425.26m units valued at N9.17bn. Transactions were driven by activities in Dangote Cement, Guaranty Trust Bank, Zenith Bank, FBNH, and UBA topped the volume chart.
Best performing stocks at the end of the day’s trading were Presco and Vitafoam that topped the advancer’s log, gaining 8.81% and 5% respectively to close at N72.00 and N2.94 each on positive market sentiments, just as Vitafoam’s full year result is expected any moment from now. On the other hand, Cadbury and Eterna shed 5.89% and 5.00% to close at N13.90 and N3.99 respectively on profit taking.


Ahead of today’s trading, expect volatility to continue being the last full trading week of the year that will usher in the year 2018, as traders take profit and seek information to reposition, especially with positive inflation figure for November. Add this to the declining interest rate in the money market that is expected to result in more private sector lending, just as full-year earnings season is in view. The positive outlook for emerging markets in 2018 as a result of high commodity prices is a major attraction as currencies of these developing markets remain relatively stable.
All of these factors begin to make much more sense to investors when you add the undervalued nature of assets on these exchanges.
Again, we advise that investors allow numbers to guide their decisions while repositioning for the rest of 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. 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.
Get your home study pack on INVEST 2018 Traders & Investors Summit and ride with the current recovery on Nigeria’s stock market and economy. By investing and trading knowledgeable. You can also still access stocks analysed in the home study pack of the INVEST 2018 traders & investors summit, which is out already.
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Ambrose Omordion
CRO|Investdata Consulting Ltd

Tel: 08028164085, 08032055467