The Nigerian Equities market closed higher last week to reverse the previous week’s down trend as a result of increasing mixed sentiment due to more first quarter earnings reports that came with mixed performance. Some companies’ numbers were impressive enough to beat market expectation while others were not. The illiquidity in the system lingered as President Muhammadu Buhari continues to withhold assent to the 2016 Appropriation Bill approved by the National Assembly a stalemate that has further slowed down the economy leading to a nosedive of national economic fundamental indices.
These are in addition to the lingering fuel scarcity and lack of public power supply that has pushed commodity prices higher and at the same time pushing inflation in the north direction, making cost of living higher for Nigerians. Recently it was reported that commodities price have gone up by 50 percent in the open market.
Meanwhile, the global markets, during the week under review, were mixed as the United States’ market closed up on the strength of its first quarter earnings reports as 76 percent of the reported numbers beat their earnings estimates. Whereas the global economic challenges and low crude price continue to affect the major sectors of the economy. Also the failure of member of the Organisation of Petroleum Exporting Countries (OPEC) at their meeting to agree on supply cut has also taken its toll on oil price as traders equally take profit from energy stocks that had rallied.
In Europe, the ECB’s decision to retain interest rate may pullback the economic progress and affect positive trend recorded early in the week. Japan’s currency continued to wax strong as the prices of stocks remain upbeat, while china’s economy continued to slowdown as a reflection of the world’s economic situation.
The Composite NSE All Share Index gained 103.84 points to close at 24, 850.11 from an opening figure of 24,719.27 after hitting a high of 24,916.15 within the period representing 0.53 percent increased for the week. This was attributed to a combination of market reactions to published first quarter financials, price adjustment for companies that declared dividend and profit taking by traders thereby halting the three-day rally to close Friday’s trading in the red.
In the same direction, market capitalisation for the period closed higher at N8.55 trillion from opening value of N8.50 trillion. The leading index’s year-to-date returns stood at a negative 13.24 percent, while market capitalisation for the same period lost N1.30 trillion.
The market breath was positive as the bulls dominated trading for the week with the number of advancers for the period under view out-pacing decliners in the ratio of 35 to 32. The NSE ASI opened the week’s trading session on a negative note, which was revered on the second trading session and the trend sustained till the forth traded sessions, shedding 0.28 percent on last trading day of the week. This signaled the return of bulls as was confirmed that profit taking was responsible for the pull back, as many traders on the strength of the numbers release so far were indifferent to the earning because they were yet to study the numbers.
All other NSE sectorial indices for the week finished higher, except for the NSE Consumer, NSE Oil/Gas and NSE Lotus that declined by 0.83 percent, 0.73 percent and 0.77 percent respectively. The week’s transaction levels, measured by aggregate volume and value decreased by 808.92 percent and 128.64 percent respectively in contrast to last week’s closing levels. In the week under review, a total of 885.92 million shares valued at N5.83 billion were exchanged in 13,870 deals compared to 8.05 billion shares valued at N13.33 billion exchanged in 15,212 deals recorded in the previous trading week.
NSEASI WEEKLY TIME FRAME
Despite the reversal in the weekly trend, the NSE ASI is still trading below its weekly 20 and 50-day moving average and at the same time has broken the support line of the bullish channel on a negative sentiment. This borders on weak demand and falling macro-economic concerns to continue its one-year bearish trend in the absence of an approved fiscal spending plan and a lack of liquidity as the subsisting supplementary budget ended since March 31. The short term index formation of symmetrical triangle which is a reversal or continuation chart pattern indicates that this trend may continue, if the expected Q1 financials do not meet market expectations.
Looking at other technical indicators, the NSEASI closed above the lower band by 39.6%., during the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 19 white candles and 31 black candles for a net of 12 black candles. Currently the MACD is bullish since it is trading above its signal line. The MACD crossed above its signal line 6 period(s) ago. Since the MACD crossed its moving average, NSEASI’s has decreased 4.26%, and has ranged from a high of 26,250.34 to a low of 24,181.51.
The current value of the RSI is 39.71, Stochastic Oscillator and MACD are signaling a sell while others like CCI and RSI are indicating buy. Whereas money flow index is still signaling funds are exiting the market.
During the week under review, the following stocks: Fidelity Bank, Forte oil, Total, Infinity Trust Bank, Regency Alliance, as well as May and Baker, were adjusted for cash or script dividend declare. Also, 16 companies released their first quarter earnings. They include: Dangote Sugar, Zenith Bank, GTBank, NEM, CAP and many others.
The market closed positively on a mixed sentiment which may continue this week as more companies release their scorecards. The rate at which companies would beat their earnings estimates by the market will determine price direction. Investors should take advantage of the low prices to accumulate in stages, stakes in good companies with long term investment goal and benefit from the ongoing dividend market now as first quarter earnings have started hitting the market to guide your stay and exit in some stocks.
STOCKS TO WATCH
NEM Insurance, Dangote Sugar, Access Bank, Fcmb, Dangote Cement AND UCAP.