Market Update for July 19
Nigeria’s stock market indices had a good day nonetheless on Wednesday as the volatility and mixed performance continued even as it sustained its 10th straight day of uptrend on above average traded volume. The market from the opening hour gapped up to consolidated a continuation chart pattern until almost the close of the day’s trading before pulling back marginally to 33,514.93 after touching an intraday high of 33,658.67 at midday, holding support above the last resistance level.
At the end of the day, the index continued to move higher, amidst expectation of more positive Q2 numbers as the earnings reporting season enters its peak, which is lower than its recent height of 34.384.70.
Africa Prudential Plc’s impressive Q2 scorecard may have given an insight into what investors should expect of some companies this season, considering the impact of investment income on the bottom line of Afriprud and its sister- United Capital, and despite the flat position of Wema Bank financials for second quarter.
The volume traded index at 0.83 as buying position was 35% while selling volume was 65% of the total transaction for the day. The NSE Consumer Goods index closed flat as traders were taking profit while investors are waiting for more earnings reports from the sector. The retracement in the sectoral index of financial services and petroleum marketing on Wednesday shows repositioning by investors in stocks within these sectors to take advantage of the earlier pullbacks ahead of Q2 interim dividend payment, that are historical common to some of the companies in both sectors.
Meanwhile, the composite NSE All Share index gained 78.62 basis points on Wednesday to close at 33,514.93 after opening at 33,436.61 points, representing a 0.23% growth on above average market traded volume that was lower than previous day’s trades. Similarly, market capitalisation was up by N26.99bn to close at N11.55tr from an opening value of N11.52tr, representing a 0.23% value gain for the day.
The upturn in the share price of NB, GTBank, UBA, Zenith Bank, ETI, Stanbic IBTC, FBNH, Okomu Oil, Guinness, Seplat, Oando and PZ impacted the All-Share index to boost year-to-date returns to 24.71%. Also, market capitalisation over the same period improved by N2.29tr, representing a 24.96% notch above the year’s opening value.
Market breadth for Wednesday was slightly positive but weak as the number of advancers outpaced decliners in the ratio of 25:24 on a high volume of trade to continue the 10-day up market in a row. Market transaction in terms of volume and value were down by 86.21% and 84.98% respectively at 331.43m shares worth N3.24bn, from the previous day’s 2.4bn units valued at N21.61bn.
Activities in the shares of Zenith Bank, UBA, FBNH, Custodian and NEM Insurance topped the volume chart to close the day’s trade.
At the end of the day’s trading activities, Transcorp topped the advancers’ log, gaining 8.76% to close at N1.49 each on expectation of its Q2 numbers and impact of government disbursement of N17.6bn to the power sector against the background of the fact that its power distribution subsidiary (Transcorp Power) is now Nigeria’s highest power generator at peak of 530 megawatts, representing 18% of all power in Nigeria last week. The company assured on its twitter handle during the week that the achievement is not happenstance, being the outcome of a planned intervention and investment expected to make investors better off on the medium to long-term. In the words of Tony Elumelu, chairman of Transcorp Plc: “We took over the Ughelli Power plant (now Transcorp Power Ltd) in 2013 and it was generating 160mw of power. Today, after investing over $300m we are at 670Mw.”
Transcorp was followed by Skye Bank with a 5.00% gain to close at N0.63 per share, on market forces and extension CBN guaranty, added to its recovery of N60bn from its pool of toxic loans.
On the flipside, Presco led the decliners’ log after dropping 4.99% to close at N61.32 on profit taking activities of investors and traders. It was followed by MRS Oil’s 4.99% decline to close at N35.44 per unit on market forces.
As trading opens this morning, expect the uptrend to continue as more companies release their Q2 numbers and the earnings reporting season enters its peak period. Investors should not panic on the pullbacks if they have taken position based on strong numbers and future prospects of any stock, but fix their gaze on the actual numbers and bail out when expectations are not met, thereby cutting their loss.
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, 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.
Be reminded once more that industry potential is 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. 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.
Meanwhile, we say a very big THANK YOU to all participants that made the INVESTDATA workshop a huge success, even as stocks recommended during the workshop continue to rally and activities in the various sectors identified as those to invest in this second half of 2017 are looking up and promising to lead the rest of the year in performance and returns.
To book for the WORKSHOP VIDEO and SOFT COPIES of WORKSHOP MATERIALS send YES to 08028164085 and 08111811223.
- OMORDION AMBROSE
CHIEF RESEARCH OFFICER
INVESTDATA CONSULTING LIMITED
Phone 08028164085, 08032055467