The benchmark index of Nigeria’s equity market at mid-week’s trading session continued its volatility moving slightly down at the opening session. The index later gapped up sharply to finally breakout the 38,000 psychological line to 38,144.02 after an intra-day high of 38,186.79 and low of 37,961.43. The sharp rally is a continuation of a 4-wave motive on seven straight days of up market with improving volume to support the rally.
The continued interest of domestic and international investors in the consumer goods sector reflected on the volume of trade among the players, as their improving fundamentals has become point of attraction. The increasing transactions in Guinness Nigeria, Nestle and Nigerian Breweries that involved foreign investors since the beginning of the week revealed rising participation of smart money in the market. This is just as the nation’s foreign exchange reserve hit a two-year high of $31.22bn, helped by rising in oil prices and the increasing foreign exchange inflows with the Naira appreciating on the back of a relatively stable exchange rate. The nation’s economy also continues to attract direct and portfolio foreign investors arising from the Central Bank of Nigeria (CBN) sustained intervention in the foreign exchange market which is now awash with liquidity. This has been helped by inflows from oil companies, banks, commodity exporters, supporting the investors and exporters’ window of the forex market.
It is noteworthy that the Federal Government approved the medium-term framework for 2018-2020 on Wednesday based on its forecast for next year and beyond for easy planning and early presentation of budget for approvals. Also there is the plan to refinance the nation’s domestic debt with borrowing from abroad to lower cost serving it, thereby further quickening the recovery of Nigeria’s economy from recession.
Back to the stock market, volume traded index for yesterday was 1.02; with buying position of 81% and selling volume, 19% of total transaction that supported high buying pressure. Nevertheless, profit takers are gradually cashing out.
This notwithstanding, the composite NSE All-Share index gained 144.46 basis points to close at 38,144.02, after opening at 37,999.56 points, representing a 0.38% growth on higher volume traded when compared to that of previous session. In the same vain, market capitalisation for the day went up by N49.79bn to close at N13.15tr, from the opening value of N13.1tr, representing a 0.38% value gain in investors’ positions.
Price appreciation in the shares of Gunness, Nestle, 7-Up, National Salt, Dangote Flour, Access Bank, GTBank, PZ, Nahco and Vitafoam, positively impacted the ASI’s year-to-date returns on investment, lifting it to 41.93%. Market capitalisation over the same period improved by N4tr, representing a 42.18% growth on the year’s opening value.
It was not all positive during the day, as market breadth turned negative with the decliners outnumbering advancers in the ratio of 23:21 on above-average traded volume to sustain the seven days of bull run. Trading activities in terms of volume and value were up by 50.61% and 20.32% respectively at 328.65m shares, worth N6.1bn, from the previous day’s 218.22m units, valued at N5.07bn.
Transactions in the shares of Jaiz Bank, FCMB, FBNH, Dangote Flour and Access Bank topped the volume chart during the session.
At the end of trading activities also, Guinness Nigeria topped the advancers’ table, gaining 10.23% to close at N87.95 each on market forces and sector influenced performance. Jaiz Bank followed with a 10% gain to close at N0.88 per share, on market forces and improved numbers.
On the flipside, Champion Brewery led the decliners’ table after dropping 9.97% to close at N2.53 per share on market forces. Next was Livestock that lost 5%, closing at N0.95 per unit on profit booking.
As trading activities opens this morning, expect volatility to continue as profit taking and portfolio reshuffling on the strength of Q2 numbers released recently to influence market players’ decision with attention in consumer goods, Financial services, Agribusiness and Healthcare.
However, investors need not panic if any pullback occurs now due to profit booking if they take position based on strong numbers and future prospects of any stock as improving economic fundamentals will have positive impact on the companies scorecards if the recovery move to growth.
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.