Market update for June 14
Trading on the floor of the Nigerian Stock Exchange on Wednesday was volatile, opening with the index sliding down, before moving up to close higher due to the increasing demand for stocks thereby halting the two-day profit taking, especially in banking and petroleum stocks.
The day’s rebound was driven by interest in banking and agribusiness stocks, at a time investors continue to focus on maximizing returns on investment, while looking forward to the Federal Government’s implementation of the 2017 budget, especially the 30% of N7.44tr earmarked for capital projects, which would be paid to contractors through the banks. The government is also investing seriously in the agricultural sector as part of efforts to ensure food security in the country, while checking the food crisis in the insurgency plagued North-East Nigeria, where Acting President Yemi Osinbajo recently lead the Federal Government’s effort to distribute about 40,000 metric tonnes of food grains to an estimated 1.8m Internally Displaced Persons in the region on Thursday, June 7, 2017, under the quarterly Special Relief Intervention plan estimated to gulp about N8bn, depending on current prices of commodity prices.
Investors positive sentiments at the end of the mid-week trading was revealed by volume index of 1.53 with buying position of 99%, while selling volume was 1% of the total volume traded for the day. This is an indication of renewed optimism for expected Q2 numbers especially for financial sector where interim dividend is common. This is especially as the Q1 earnings of banks and insurance companies that pay interim dividend had revealed a high possibility of dividend payment at the end of half year.
As investors expect positive economic data and implementation of the 2017 budget judiciously by following the ERGP agenda that will fasten the nation economic recovery and further boost confidence that is driving the stock market and attracting foreign inflows.
Stock markets around the world were mixed as the Fed finally hiked rate at the end of its meeting on Wednesday, with oil price still sliding in the international market. This is likely to weaken the dollar as the move by Fed signals exit of monetary stimulus in the global economy and markets. The market awaits the outcome of other central banks’ meetings slated for this period to know the direction they are heading, if there will be unison or otherwise.
Meanwhile, the NSE All Share Index gained 456.55 basis points to close at 33,598.20, after opening at 33,141.85 points, representing a 1.38% growth on a huge volume traded. It was however higher when compared to previous day’s transaction level. Similarly Market capitalisation for the day went up by N157.8bn to close at N11.62tr, from an opening value of N11.46tr, representing 1.38% value gain in investors’ portfolios.
Upturn in the share prices of Oando, FBNH, Okomu Oil, Zenith Bank, Presco, Flourmils, Stanbic IBTC, Guaranty Trust Bank, UBA, Seplat, NB and Lafarge Africa impacted positively on the All-Share index’s year-to-date return to 25.02. Also, growth in market capitalisation for the same period stood at N2.37tr, representing a 25.65% appreciation above the year’s opening value.
Market breadth for the day was positive as the number of advancers outpaced decliners in the ratio of 36:22 on huge volume of trade to halt the two-day down market.
Market transactions in terms of volume and value were up by 85.03% and 13.51% respectively to 759.05m shares from previous day’s 410.22m shares and N6.3bn from the previous day’s N5.55bn. Activities in the shares of FBNH, LASACO, ACCESS BANK, ZENITH BANK and TRANSCORP topped the volume chart to close the day’s trade.
At the end of trading, May & Baker topped the advancers’ log with its share price gaining 10.20% to close at N3.78 each, on continue impact of the Memorandum of Understanding (MoU) with the government to produce vaccine. It was followed by Ashaka Cement with a 10.18% gain to close at N14.07 per share, on market forces as government drive on infrastructural will support bottom line in the future.
On the flipside, International Brewery led the decliners’ log, after dropping 4.80% to close at N28.56 on profit taking and weak full year earnings report, while Cutix followed with 4.62% to close at N1.86 each on profit taking.
As the market opens this morning, expect mixed action of profit taking may sustain volatility, amidst profit taking and repositioning in value stocks, especially as investors await the release of May inflation figures today. All things considered, investors should not panic on the recurrent pullbacks if they have taken position based on strong numbers and future prospects of any stock.
Again, we advise that investors allow numbers to guide their decisions to reposition for the rest of the year’s trading activities, especially now that prices of stocks are looking up ahead of recovery economic fundamentals, if the numbers will support the price reversal or continuation.
It is time to use your technical tools to take decision by knowing the support and resistant level to reposition or exit any position.