Analyst Predicts Stock Price Volatility

A capital market analyst, Mr Ambrose Omordion, on Monday predicted that the Nigerian Stock Exchange (NSE) would likely experience price volatility this week due to profit taking.

Omordion, the Chief Operating Officer, InvestData Ltd, expressed this view in an interview with the News Agency of Nigeria in Lagos.

According to him, the market is likely to witness panic selling and re-positioning ahead of the earnings reporting season.

He said that investors would embark on profit taking to take advantage of 10.21 per cent growth recorded by the market last week.

The market analyst said that the nation’s December inflation figure, expected to be released within the week by the National Bureau of Statistics, would also determine the market trend.

Omordion, however, urged investors not to be sentimental in their investment decisions while re-positioning for the rest of the year.

He said that investors should make use of numbers released in the market to guide their investment decisions.

The analyst attributed the market 10.21 per cent growth last week to low valuation and “high upside potentialities as many stocks were selling below their 2014 prices in spite of improved earnings and returns.”

He said that the bullish sentiment was due to early positioning by all-classes of market players in low, medium and highly capitalised stocks ahead of the earnings season.

Omordion said that the NSE All-Share Index Year-to-Date return stood at 12.17 per cent due to huge price rally.

Equities Market Kick-Starts the Week Positive
Meanwhile, the equities market reversed last Friday's negative close to open the week 51bps higher; consequently the All Share Index settled on Monday at 43,119.00 points while YTD return expanded to 12.7%. Investors in turn gained N78.8bn as market capitalization closed at N15.4tn. The major drivers of today’s positive close were DANGCEM (+1.2%), GUARANTY (+2.2%) and ZENITH (+2.4%) although buying interest was observed across small and mid-cap stocks. On the contrary, activity level declined as average volume and value traded fell 47.6% and 55.7% to 730.6m units and N6.3bn respectively.

Performance across sectors was largely negative as 4 of 5 indices closed in the red. The Industrial Goods index led laggards, shedding 1.6% largely on the back of losses in WAPCO (-5.0%). The Insurance index followed closely, falling 1.0% as investors booked profit in LINKASSURE (-4.4%) and WAPIC (-3.5%). Similarly, sell offs in FORTE (-4.7%), NIGERIAN BREWERIES (-1.3%) and FLOURMILLS (-4.3%) dragged the Oil & Gas and Consumer Goods indices 0.8% and 0.1% lower respectively. On the flip side, the Banking index was the lone gainer, rising 1.1% due to a sustained rally in GUARANTY (+2.2%) and ZENITH (+2.4%).

Investor sentiment measured by market breadth (advance/decline ratio) remained positive at 1.0x from 1.0x recorded the previous Friday consequent on 26 stocks advancing against 26 decliners. The top performing stocks were FCMB (+9.8%), SKYE (+8.3%) and CAVERTON (+5.0%) while ETERNA (-6.8%), UBN (-5.0%) and WAPCO (-5.0%) were the worst performing stocks for the day. Although the equities market performed positively today, we expect a largely mixed performance this week as we anticipate profit taking in sessions ahead.