At Last, A Budget To Drive The Economy As Market Admits Falling Macro-Economic Indices | Independent Newspapers Limited
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At Last, A Budget To Drive The Economy As Market Admits Falling Macro-Economic Indices

Posted: Mar 28, 2016 at 3:00 am   /   by   /   comments (0)


Trading activities on the floor of the Nigerian Stock Exchange closed for the week Thursday on a positive note as Friday and Monday were declare public holidays to mark the Easter.

The positive close was despite the myriad of factors bedeviling the market like profit taking by traders and investors, the hike in interest rate by the Central Bank of Nigeria (CBN), and the declining earnings with only a few scorecards that hit the market have so far been impressive.

The oil price at the international market has since fallen below $40 per barrel again, despite all the meetings among top produces, including the Organisation of Petroleum Exporting Countries (OPEC) cartel to control supply and support commodity prices to rebound.

Despite these negative factors, the Composite NSE All Share Index gained 205.12 points to close the week at 25,899.91, up from an opening figure of 25,694.79 points, after hitting a high of 26,020.40 representing 0.80 percent growth earlier. The Market capitalization also moved upwards by 0.80 percent from N8.84 trillion in the previous week to N8.90 trillion.

The year-to-date returns of the NSE’s basic indicator is currently 9.57 per cent negative, just as market capitalisation for the same period has lost N941.52 billion.

It is true that monetary policy alone cannot revitalise the gloomy economy, but the CBN’s adjustment of the benchmark Monetary Policy Rate (MPR) to 11 percent from 13 percent within a very short period will not do the economy any good. Rather, it will increase the cost of borrowing and in the process, continue to hamper the development and growth of the real sector.

The proposed increment in Value Added Tax by the Federal Government also is another way of further arm-twisting Nigerians, as cost of products and services increase at a time many workers both in government and the private sector are either been owned  salaries or poorly paid. This will further hamper the spending power of Nigerians and throw the economy into the red.  Meanwhile, the budget of change was finally approved by the National Assembly after more diligent work had been done. Expectations are that it’s implementation by way of increased government spent via mobilisation of contractors will  bring relief to the Nigerian people and jump-start the economy again.

The MPC decision to hike interest rate in the face of rising  inflation  and the proposed hike in VAT are contrary to the government’s desire to encourage locally made products and goods, because this measures will raise the cost of borrowing, instead of reducing it to boost productivity. Besides, the upward adjustment of the Cash Reserve Ratio (CRR) from 20 percent to 22.5 percent is directly encouraging the banks to adjust their rates to attract funds to their coffers, while discouraging investments outside money market instruments and bonds.

Back to the equities, the bears dominated market breath throughout the four trading sessions of the week, despite the mixed performance recorded.  The NSE ASI opened the week with up-trend, recording a gain of   0.81 percent, it continued on the positive direction in the second trading session adding 0.45 percent. The trend however reversed in the third trading session with 1.09 percent southward movement. The last trading session recorded a positive momentum as the bourse improved by 0.63 percent to close the week in green. The sectoral indices closed in mixed directions with the NSECNSMRGDS leading the advancers, after chalking 0.05%, while the NSEOILGAS led the losers with 0.04%.

The week’s transaction levels measured by volume and value improved by 0.44 percent and 0.14 percent respectively in contrast to last week’s closing levels.

In the week under review, a total of 1.55 billion shares valued at N10.5 billion that changed hands in 14,705 deals, compared to 1.08 billion shares valued at N9.14 billion that were transacted in 19,161 deals in the previous trading week. the improvement momentum  during the week were as a result of investors and traders moving from one stock to another to benefit from the dividend incentive from the companies as registers are being closed.



The NSEASI is still struggling within the bullish channel but under a major bearish resistant line that have kept the index below since 2014. Despite the earnings surprises and improved momentum the market has remained under.  The NSEASI closed above the lower band by 48.5 percent. MACD is currently bullish since it is trading above its signal line. The MACD crossed above its signal line 3 period(s) ago.  Since the MACD crossed its moving average, NSEASI’s price has increased 0.31% and has ranged from a high of 26,250.34 to a low of 24,181.51.


Technical Indicators like MACD is bullish and is signaling buy in addition to RSI reading 44.45 and CCI having buy signals, but Stochastic Oscillator (SO) is signaling over-bought and at the same buy. Money flow is indicating that funds are still entry the market.

If you are already in good fundamentally sound companies that had released surprising earnings with dividend, take your dividend and extent your waiting period to see the impact of the quarterly earnings as first quarter is coming to an end in few days.


Market Announcements For The week

The management of six companies announced their full year earnings reports for 2015, while four others recommended dividend for their shareholders. Unilever declared a five kobo, Trans-nationwide recommended 10 kobo, while Sterling Bank and Transcorp Hotel announced nine kobo and 0.43 kobo respectively.

Also, last week, Skye Bank and Learn Africa joined the league of companies that issued profit warnings by notifying the exchange and the investing community that their performance in 2015 will be lower than was posted in 2014.

The following companies, SEPLAT, Ecobank Transnational Incorporated and Stanbic IBTC, notified the exchange of the appointment and/or resignation of their directors during the week.



Index    Open     Close     %Change

ASI         25,694.79             25,899.91             -0.80

NSE 30  1,129.28               1,145.87               1.47

NSE BNK              235.23   238.46   1.37

NSE- INSURANCE             130.35   128.29   -1.58

NSE COSMAR     608.91   639.12   4.96

NSE OIL & GAS  361.30   347.98   -3.69

NSE LOTUSUM  1,784.36               1,768.38               -0.90

NSE INDUSTRY  1,979.90               1,972.57               -0.37

NSE PREMIUM  1,504.87               1,495.00               -0.66

NSE PENSION    713.66   711.43   -0.31

NSE MAINBOARD            1,161.17               1,180.72               1.68


MTA CAP  (N’trillion)      N8.84 trillion       N8.90 trillion       -0.80




Company             Open      Close    %Change             Remarks

Ucap      1.70        2.00        17.65     Strong EPS/Div

Fidelity  Bank     1.20        1.37        14.17     Q4 Expectation

NB          105         117.70   12.10     Market forces

Vitafoam             4.29        4.73        10.02     Market forces

Transcorp            1.12        1.19        6.25        Market forces


Africa Prudential              3.20        2.51        -21.56    Price Adjustment

Nascon 7.60        6.52        -14.13    Profit Taking

Cadbury               17.20     14.77     -14.13    Market forces

Trigerbrand        2.90        2.56        -12.02    Profit Taking

Honeywell          1.62        1.44        -11.11    Market forces



Market Outlook

The improved optimism may  likely continue this week, but the strength of the expected earnings to be announced with trading activities resume on Tuesday morning after the holidays will determine the direction, coupled with expected adjustment in money market rates to attract funds from the stock market with MPR and CRR hike by the CBN. The current high dividend yield in the market may delay the impact of the CBN rates hike on the market.

The expected positive sentiment this week may also supported an up-trend. However, let numbers and dates guide your entry and exit, if you are a trader.


Livestock, United Capital, Okomu Oil, Zenith Bank, Fidelity and UBA. The expected dividend among the stocks mentioned and dividend income for the companies that have announced are the attraction in those equities.