NSE Volatility Lingers, Amid Profit Taking, Portfolio Realignment On Q2 Numbers, Economic Data

Market Update for August 15

Nigeria’s stock market got a hit on Tuesday to continue its volatility with all the indices gapping down sharply as investors intensified profit booking and late reaction to the global political tensions with North Korea withdrawing its threat to drop missile in US territory.
The market was up slightly in the first hour, but came down sharply by midday and afternoon, looking like an intra-day bottom was in view. An important resistance could not be taken out, while the intraday pullback was held near the trading session lows to close the day lower on high volume. The intraday high and low of the index were 37,954.43 and 37,007.13 respectively.
Going by these realities, INVESTDATA Research believes investors and traders should play the market with knowledge to protect funds and maximize profit, even as we note that doing this entails good money management when trading and investing.
However, cutting loss in good time is necessary, but different from panicking. As we continue to stress, every investment or position taking in a stock is against your own expectation. If the factors that attracted you into a position are intact, just as the positive drivers of the general market, you don’t need to panic. But where the factors or fundamentals are disintegrating or vanishing, beat a hasty retreat immediately to protect your capital, while you study the situation.
However, Tuesday’s selling pressure was high as revealed by the volume traded index of 1.18; with buying position of 9% and selling volume of 91% of total transaction, thereby supporting the down market, even as we note some accumulation in few stocks by smart money.
The closing numbers on the Nigerian bourse was the direct opposite of what happened in markets around the world which closed higher to sustain the recovery from last week’s panic caused by North Korea’s withdrawal of its threat to drop missile in the US. Despite cautious trading as earnings reporting season remain light.
Meanwhile, the Nigeria’s benchmark All-Share index fell 854.36 basis points to close at 37,950.96, as against the 37,950.96 points it opened, representing a 2.25% decline on high volume traded when compared to the previous sessions. Similarly, market capitalisation was down by N294.48bn to close at N12.9tr, from an opening value of N13.13tr, representing 2.25% value loss in investors’ portfolio.
The ASI was depressed following profit taking leading to a fall in the share prices of Guaranty Trust Bank, which incidentally presented its audited half-year financials to the Exchange after trading (READ); Stanbic IBTC, UBA, Dangote Cement, Lafarge Africa, Dangote sugar, Guinness Nigeria, National Salt, Zenith Bank and Access Bank. The audited financials for half-year are expected anytime soon from the trio of Stanbic IBTC, UBA and Access Bank. Losses sustained by these stocks helped to reduce the ASI’s year-to-date returns to 38.04%, just as market capitalisation growth dropped to N3.54tr, representing a 38.28% improvement on the year’s opening value.
Market breadth for day remained negative with the number of decliners increasing to outweigh advancers in the ratio of 35:11 on high volume of trades that continued a two-day down market. Trading activities in terms of volume and value were however up by 23.88% and 28.69% respectively at 391.63m shares, worth N5.44bn, as against previous day’s 316.12m units, valued at N4.22bn.
Also, transactions in the shares of Access Bank, Zenith Bank, UBA, FBNH and Guaranty Trust Bank topped the volume chart during the session.
According to the result presented by Guaranty Trust Bank after the close of the market, the directors proposed an interim dividend of 30 kobo, a situation the market would expectedly react to from this morning.
Meanwhile, at the close of trading activities for the day, GSK topped the advancers’ table, gaining 5% to close at N21.00 each on market forces. Berger Paints followed with a 5% gain at N7.14% per share, on market forces.
On the flipside, Morison Industries fell the most after dropping 8.16% to close at N0.90 per share on market forces; ahead of PZ that lost 5.00%, closing at N25.65 per unit on profit taking despite the expected full earnings report.

As trading activities open this morning, expect volatility to continue amidst profit taking and portfolio reshuffling on the strength of Q2 numbers, especially with the impressive numbers emanating from the nation’s first tier banks which are giving insights into what should be expected at the end of the year if the economic recovery becomes a reality despite the slow and unclear implementation of the 2017 budget by the government. Even so, the July inflation figures are expected today ahead of Nigeria’s second quarter GDP data.
However, investors need not panic of yesterday pullback due to profit booking if they take position based on strong numbers and future prospects of any stock. Since there is no bad news in the market.
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 prices of stocks are looking up ahead of the improving economic fundamentals.
It is time to use your technical tools to take decision by knowing the support and resistant level to reposition or exit any position.
Be reminded once more that industry potential, market timing are very important when picking a stock, because there are factors that are sector-specific and would naturally impact positively or negatively on companies operating within such an industry, especially now that the economy is recovering. Market is in phases know it in order to manage your trading and investing risk. For stocks that should be on your shopping list to buy in this oscillating market or pullbacks sign up to INVESTDATA BUY AND SELL signal setup by calling 08032055467.
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