The NSE Week Ended January 26, 2007 as Seen By Chukwumah Biosah

The trading week ended January 26, 2007 was not spectacular for most of the listed stocks in the NSE.  While stocks like UBA,  EvansMedical, ETI , Platinum, etc. gained for the week, majority of the stocks in the NSE either traded sideways, or declined. Although the week was uneventful, it is too early to portend that the bull market trend is over. I believe the market is taking a breather after several weeks of up trend.

Notable Gainers

UBA
When UBA was profiled in my article titled, Where Are the Shares of UBA Headed? on January 8, 2007, the stock was trading at N27.95.  I then predicted that if the stock breaks through the N30 resistance, the stock will trade up to N38.89, the first Fibonacci target. On January 19, 2007, stock closed at N34.44, before it was adjusted down to N27.55 after the 1 for 5 bonus shares promised earlier by the bank was implemented.

On January 26, 2007, the stock closed at N29.88. The closing price of N29.88 represent a pre-bonus adjusted price of N37.01, which is less than N2 from our original target. The daily trading volume on this stock has tripled. This indicates there is a lot of surpasse investor interest in the stock. If the bullish mood in the market continues, I expect the stock to surpass my original target. However, investors should watch the price movement and daily volume to ascertain that there is a continued positive correlation between the stock price and volume movement.

A cash flow analysis to determine the impact of the N8 billion judgement on the financial performance of UBA will still be calculated as promised. This will be done as soon as we receive the detailed financial data from management. A cursory review of the summary financials sent to Proshareng does not indicate a negative impact.

EvansMedical
The stock price of EvansMedical was up 15 percent during the week. This stock was profiled in my recent analysis of May & Baker. Analysis of Evans Medical indicated that the stock price was less richly priced based on historical revenue trends. However, both stocks are worth watching, because they seem to be attracting a lot of investors’ interest.

Platinum Habib Bank (PHB)
PHB gained 12.4 percent. This stock is worth watching because it closed at N3.62 on January 26, 2007.  The closing price of N3.62 represents a 52 week high with no overhead resistance at this price. I noticed that recently PHB has implemented several shareholder value creation strategies, but I am apprehensive that PHB currently has 19 billion shares outstanding. This large number of outstanding shares makes the stock too “heavy” to trade and prevents the stock from having any significant moves. However, the bank is in the process of implementing a 3 for 1 stock reconstruction. This stock will be an interesting one to watch after the reconstruction is completed.
ETI
ETI gained approximately N10 or 3.8 percent.   This stock has been trading in a very tight range since the beginning of 2007. Although, it has had very wide swings, the trend has been positive.  As I noted in one of my previous articles, it has several overhead resistance. The stock needs to break through three significant overhead resistances (N270, N284, and N299), before it can trade up to the range of the previous high it attained in September 2006.

Notable Losers
As previously noted, majority of the stock in the exchange either lost or traded sideways for the week. This is not an ominous sign. It appears that stocks are taking a break after several weeks of up trends. However, Cadbury is worthy of note.

Cadbury Nigeria Plc.
In my January 12, 2007 article, I noted that Cadbury Nigeria Plc was exhibiting some resurgence. From January 8, 2007 through January 23, 2007 the stock gained N19.56, or 70%. There really was no reason for the up trend, because the financial misrepresentation issue surrounding the company has not been publicly resolved. Investors could have been bottom fishing, because the “blue Chip” company was trading at historical lows. No matter what the reason for the up trend was, the price and volume indicated that the stock was moving higher and I try not question the charts. Smart investors who understand  price trends usually join the party.  

On January 26, 2007 the stock closed at N40.7 after three straight days of losses. The current decline represents a 34.5% loss of the N19.56 gained from its bottom of N27.90 on January 8, 2007, and a N6.76 or 14% decline from the N47.46 high achieved on January 23, 2007. At the current price, the stock has violated its 5 and 10 day SMAs’, but it is still above its 20 day SMA of N36.54. I will continue to watch the stock and hope that it does not violate its 20 day SMA.

The jury is still out on this stock. I believe most investors are looking forward to receiving the revised financial statements