Market Update for October 4

The nation’s stock market had a positive, even if volatile Wednesday. The day started out with a move downside, before gravitating back and forth, reaching support and holding twice between the mid-morning and midday, as profit taking ensued in the Industrial Goods and Insurance sector. There was a real strong intraday rally to a high of 35,500.23 from a low of 35,272.84 that is becoming the new month’s support level. Since the market broke out of the downtrend line it had consolidated sideways its movement in a narrow range, waiting for positive news as earnings reporting at this point is light with portfolio repositioning and speculative activities underway as the season gradually kicked off with more companies announcing their Q3 closed period (when their senior officials and directors who are shareholders of such companies are forbidden from trading in them to prevent a situation where they take advantage of price sensitive information they have by virtue of the office they hold).
It was a nonetheless positive day for banking stocks, especially the first tier banks that have capacity to post positive Q3 numbers despite the significant growth in non-performing loans in the sector, as the banks continually showing a positive earnings trend so far.
Market traded volume was low with a stronger selling pressure as revealed by the volume index for the day that stood at 0.72, while buying position was at 38% and 62% selling volume of the day’s transaction. This halted previous day’s down market as it the bourse continues the search for direction in the midst of mixed technicals.
As the government tries to further stimulate the economy by implementing the Ease of Doing Business action plan, promising to release part of the year’s capital budget very soon, even when we know the proposed amount is very small, compared to N2.3tr earmarked for infrastructural development in the 2017 budget. Also, there is the plan to move about 50% of the 2017 capital budget to 2018 as the government awaits approval of the National Assembly to fund the budget through external borrowing that would further balloon Nigeria’s external debt and the cost of servicing such on a yearly basis. This borrowing plan is also regardless of the nation’s improved crude oil output of about 2m barrel per day, at a time oil is selling above $55 at the international market, higher than the budget’s benchmark.
Meanwhile, the composite NSE All-Share index gained a marginal 52.48 basis points to close at 35,358.57 from an opening figure of 35,306.09 which represented 0.15% growth, just as market capitalisation for the day went up by N18.26bn to close at N12.18tr, from the previous session’s N12.17 trillion, representing a 0.15% appreciation in investors’ position. The upturn in the share prices of medium and high cap equities like Nestle Nigeria, Zenith Bank, Total, Stanbic IBTC, Access Bank, National Salt and Honeywell Flour impacted positively on the ASI’s year-to-date return which stood at 31.57%, just as market capitalisation grew by N2.93tr, representing a 31.72% rise above the year’s opening value.
Market breadth for the day was slightly positive as the number of advancers outpaced decliners in the ratio of 19:18 on a low volume traded that was lower than previous day’s level to reverse Tuesday bear market.
Market activities for the day, in terms of volume and value, were down by 72.46% and 53.02% respectively to 174.67m shares worth N2.72bn, up from previous day’s 634.33m units valued at N5.79bn.
Transactions in the shares of UBA, FBN Holdings, Zenith Bank, Access Bank and Guaranty Trust Bank topped the volume chart.
During Wednesday’s session, the NSE announced the cancellation of 2,080,104,954 ordinary shares or 5.73% of United Bank for Africa’s shares in issue from the Daily Official List. The cancelled shares were initially held under the bank’s Staff Share Investment Trust Scheme (SSITS) and have reduced UBA’s outstanding shares from 36,279,526,322 before the cancellation, to 34,199,421,368 units (READ).
The NSE also announced the suspension of trading in the shares of Academy Press, Nigerian German Chemical, Roads Nigeria and Thomas Wyatt, over their failure to file their quarterly and full-year financials. In doing so, the NSE it relied on “Rule 3.1, Rules for Filing of Accounts and Treatment of Default Filing, Rule book of The Exchange (Issuers’ Rules).” (READ)
At the close of the day’s trading, C&I Leasing topped the advancers’ table, chalking 9.50% to close at N1.96 per share on market sentiment, followed by National Salt 4.99% notch at N12.62 per share on market forces ahead of Q3 numbers. On the flipside, MRS Oil lost 4.97% to close at N30.39 on market forces/sentiments, followed by Continental Reinsurance which shed 4.67% to close at N1.43 per unit on profit taking.

TODAY’S OUTLOOK
As the market opens this morning, expect volatility to persist owing to portfolio repositioning ahead of earnings season and end of the year-end continues.
One thing that is clear in the current market situation is that smart investors are accumulating and enhancing their positions in selected stocks.
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 looking down amidst improving economic and market 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. 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.
Get your home study pack today and ride with the current recovery on Nigeria’s stock market and economy. By investing and trading knowledgeable
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Ambrose Omordion
CRO|Investdata Consulting Ltd
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