So far in the week, market experienced more pessimistic and speculative trading amid weak market optimism along with negative breadth while market price volatility gained weight accordingly, following the three days rally recorded recently.
Also, market records southward trend on the back of low bargain appetite displayed by investors while market breadth lost ground accordingly to short term retracement. In addition, the increased speculative trading pattern witnessed in the last one week stoked the extension of short-term retracements as envisaged in our previous report.
Mid-week analysis revealed sustained downtrend amid waning price correction with -0.96% loss so far in the month of August while market now trades within trading range as against previous overbought posture as revealed by market RSI
Nevertheless, risk appetite gained more weights as investors engaged in active speculative trading significantly, particularly towards the value and active penny stocks despite the mild profit-taking tendency observed mainly towards blue chip stocks and heavy counters.
Furthermore, the market volume turnover sustained negative posture while the naira votes significantly plunged further as more heavy counters shed weight. The moderate loss recorded by Dangote Cement Plc contributed to this outlook.
In our opinion as revealed by extensive analysis, market is now trades within trading range as it stepped out of overbought region while price correction thinned out amid growing speculative trading observed so far in the week.
At the end of the today’s session, technical analysis revealed sustained weak bargain appetite as market witnessed pessimistic trading so far in the week while market turnover remained negative.
Market closed with WTD performance of -0.58% loss- unimpressive but better performance and low market optimism was observed when compared with previous mid-week performance of -1.52% gain while YTD performance stands at 11.45% as against 11.75% recorded in the previous week.
The mild profit taking and pessimistic activities witnessed towards blue chips and big CAP stocks in Industrial Goods, Consumer Goods, Oil & gas and Finance, sectorscontributed to the market outlook so far in the week.
The Stocks on the Hunters’ Radar
Investors’ Trading pattern and psychology:
The trading pattern suggests increased speculative tendency while the profile of top 10 stocks on the investors’ radar reveals increased risk appetite as majority of the stocks are penny stocks while no medium or high priced stocks made top ten stocks on the investors’ radar.
Notwithstanding, we remained concerned as regards to the driver of these top penny stocks that dominated investors’ radar so far in the week.
Further analysis into their last financials revealed mixed outlook as subsequent outlines will shed more lights.
Snapshot comment on their recent results.
UTC in its Q2'12 result recorded unimpressive performance with negative performance in its top-line and bottom-line by -19.39% and -19.31% respectively- this could translate to falling market share while the low profit margin of 2.57% buttressed this further. Also, the net assets posture of the company recorded weak positive growth of 2.68% while the 4.72% increase in cash and bank balances suggests weak financial status of the company.
EVANSMED in its audited result recorded impressive performance amid sustained strong market share as reflected in its top-line and bottom-line performance. The company recorded significant PAT growth of 978.57%, though the profit margin closed unimpressive, indicating poor cost management and low operating inefficiency. Similarly, the growing debt profile buttressed this further as reflected in other debt balance. However, we commend the impressive posture of the net assets of the company amid strong working capital growth.
LONGMAN in its Q2'12 result recorded improved performance with impressive PAT posture, stepping out of loss recorded in the previous year while the company strengthened its market share as reflected in turnover growth of 12.18%. However, the working capital of the company came in weak with a plunge of 6.26% amid negative growth of -4.13% recorded in the net assets.
GTASSURE (MANSARD INSURANCE PLC) in its Q1'12 result recorded strong and impressive turnover posture to sustain its market share while its profitability posture appeared stronger and robust with 199.77% growth. In the same view, net assets of the company maintained its strong posture while the company appeared growing debt amid weak cash balance. We call attention of the management to this trend as the -25.72% plunge recorded could send wrong signal to discerned investors.
Analysis of investors’ radar (gainers’ list) revealed increased speculative tendency due to improved bargain drive towards penny stocks while high and medium priced stocks sustained weak patroange.