Market Update for June 30
Bull sentiments resurfaced on the Nigerian Exchange Thursday, the last trading session of the month of June, following increased positioning by bargain hunters and fund managers while rebalancing their portfolios to end the quarter slightly up on a less than average traded volume. The benchmark NGX All Share Index inched up, thereby halting two consecutive trading sessions of profit booking and selloffs, a rebound attributed to investors demand for financial services and energy stocks in the midst of positive market breadth and earnings expectation,
Given that every investment is against expected future return, stocks are fantastic financial instruments to trade if you understand timing and season, allowing your entry and exit strategies to be guided by dates and technical tools, especially as the half-year earnings reporting season draws closer daily. When it comes to trading, there are different thinking among players whether you are a trader or investor, as companies are classified into dividend-paying, growth, and value stocks, among others. Also, understanding what is happening in each sector and how such will influence company performances positively or otherwise is key because equity prices feed on company earnings. Also, it is important that you look at market caps to know where each company, or stock belongs- whether large, medium or low cap to help you evaluate each, because a stock can be cheap and expensive at different phases of the market.
Thursday’s trading has confirmed a ranging market after the index sharply rebounded last week, a good development for investors and traders, since it broke out the 51,804.21 basis points level and ‘T’ line ahead of the 52,000 basis points to test 51,991.27bps on a relatively low traded volume. The NGX index crossed the ‘T’ line to test its 20-DMA, this signal buy opportunity in the market, because buying interests have improved from the previous sessions to confirm another rally is underway. Also, breakout traders are taking advantage of the crossover to accumulate positions in stocks that recently pulled back especially the interim dividend paying companies.
To avoid the old mistakes and costly losses of the past in this changing market momentum, we invite you to attend the Investdata Q3 Master Class, ahead of the half-year earnings reporting season and general elections. We note that the major political parties just concluded their primaries to select presidential candidates ahead of the February 2023 general election. Current developments in the market do suggest that discerning investors are gradually becoming greedy, while others are fearful, while actively buying more, as seen in the recent market corrections. Despite the selling sentiment witnessed at the close of trading, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.
In the day of window dressing by fund managers, the price actions simply mean that the market tells you what to do, and not the other way around, because the price is always right and does not care whatever a trader feels. Bull markets can go on for days, weeks, months, and years, but bear markets happen unexpectedly and can quickly destroy a trader’s profits, or even trading account if a stop loss is not in use.
Oil prices pulled back slightly after rebounding in recent time in the international market to trade at $114.80 per barrel, after American Petroleum Institute reported a large crude draw, even amidst fear that oil markets could face a doomsday scenario this week or beyond, if OPEC has enough capacity to avoid supply problem as long as the ongoing Russia-Ukraine war persists. Also, G7 plans to cap price Russian oil, as these chronic high energy prices are killing the global economy, heightening inflationary pressures across the globe on a weak economic outlook, thereby influencing monetary policies of central banks as they move to checkmate the impacts of the Russia-Ukraine conflict on the global economy to avoid economic recession. The nation’s soaring inflation is a potent threat to the fixed income market and investment yields, which should be an indication that there will be a reversal of funds flowing back to equity space in no distance time as institutional investors balance their portfolios.
Technically, the NGX index action has confirmed the distribution phase of the market, trading above the ‘T-Line’ and 50-day moving average, as the market remains strong, despite yesterday flat position. The strong resistance level has been within the 52,000 basis points region, while volatility persists and recovery towards the next breakdown is sported around 51,991.27bps. Should the index break this point, the next visible resistance is 51,998.75bps.
The possibility of the trend being sustained is high, and a function of market forces and improved economic conditions during this month and beyond, following which we advise investors to play defensive stocks and reduce investment risks around the market.
Meanwhile, Thursday’s trading opened slightly on the upside and was sustained throughout the session, despite oscillating on position-taking and selloffs in manufacturing stocks, a situation that pushed the NGX’s index to an intraday high of 51,991.27bps from its lows of 51,759.56ps before closing marginally above its opening points at 51,817.59bps.
Market technicals were positive and mixed, as volume traded was lower than the previous day in the midst of breadth favoring bulls on a selling sentiment as revealed by Investdata’s Sentiments Report showing 75% sell position and 25% buy volume. The total transaction volume index stood at 0.75 points, just as momentum behind the day’s performance was relatively weak as Money Flow Index is looking up at 32.00pts, from the previous day’s 24.72pts, indicating that funds entered the market.
For you to successfully invest and trade in this volatile market, order for Investdata’s video on Buy & Sell Technical Analysis Toolbox to navigate the volatile market profitably, enhance trading decisions and boost your bottom line. Also, to up your game in stock trading and investing, understanding the key to trading price and index action will go a long way to make the difference in your trading results, check out the video materials below.
Index and Market Caps
NGX All Share index, at the end of the day trading inched by 15.11bps, closing at 51,817.59bps, after opening at 51,802.46bps, representing a 0.03% drop. Similarly, market capitalization fell by N8.14bn, closing at N27.94tr, from the previous day’s N27.93tr, which also represented a 0.03% value gain.
Attention: If you have not signed up for INVESTDATA’s buy and sell signal setup, don’t delay, because the number of stocks entering their buying range has just increased to 30 as they build a new bullish base and positive chart patterns to be on our watchlist. These stocks have double the potentials to rally, considering their earnings prospects and the oscillating moves in a recovery market and economy.
To become a member, send ‘YES’ or ‘STOCKS’ to the phone numbers below. Take advantage of this service to buy right and sell right at the current oscillating market in the midst of earnings season, portfolio reshuffling, and repositioning as we await an economic reform policy that can stimulate and re-track the economy to the path of growth and development.
Thursday’s upturn was driven by position-taking in University Press, FCMB, Wema Bank, FBNH, Flourmills and Africa Prudential among others. This impacted mildly on Year-To-Date gain, dragging it to 21.31%, while market capitalization growth stood at N5.53tr YTD, representing a 24.75% rise over the opening level for the year.
Mixed Sector Indices
Performance indexes across sectors were mixed, as NGX Consumer and Industrial goods closed lower with 0.21% and 0.15% respectively that closed 0.07% lower, while the NGX Energy led the advancers after gaining 0.42%, followed by Insurance and Banking with 0.41% and 0.28% respectively.
Market breadth was positive, as gainers outnumbered losers in the ratio of 20:18; just as activities in volume and value terms were mixed, after investors exchanged 223.11m shares worth N3.87bn, with volume driven by trades in FBNH, Transcorp, UBA, GTCO and Accesscorp.
University Press and Cornerstone Insurance were the best-performing stocks after gaining 9.79% and 9.09%, closing at N2.56 and N1.0.63 per share respectively on market forces. On the flip side, PZ and Triple Gee lost 9.86% and 8.42% respectively, closing at N9.60 and N0.87 per share, on profit taking and selloffs.
We expect cautious trading as bargain hunting continues, ahead of interim dividend season in second half, while Investors digest March audited accounts of University Press and Learn Africa reports that were released on Thursday. We note also the flow of funds into the fixed income segment on the rate hike by the CBN, as sector rotation persists and players digest the macro-economic data and Q4 unaudited earnings released so far. Analysts are also on the lookout for the inflation rate of 17.71% to support recovery in the new month amid oil prices oscillation. Also, the market continues to interpret the rising inflation in relation to the crude oil price and other factors, in the midst of profit-taking and portfolio rebalancing. This will result in market players targeting fundamentally sound and dividend-paying stocks in the hope of dividend announcements.
Meanwhile, the home study packs on Comprehensive Stock Market trading course video, Stock Market Analysis Beyond Fundamental & Technical Analysis, 2022 Actionable Trading Plan and Opportunities in Q1, INVEST 2022 Traders & Investors Summit materials and 10 Golden Stocks for 2022, Strategies and How to invest profitably in this Changing Market Dynamics/ Recession, Mastering Earnings Season For Profitable Investing and Trading in any market situation/ cycles, Life Beyond COVID 19 Investment Opportunities In The Stock Market are now available. To obtain your pack send ‘Yes’ or ‘Stock’ to 08028164085, 08179547605 now.
Q3 Investdata Master Class
Theme: Profiting From Asset Pricing In An Uncertain Market, Rising Rates Environment
- The State of the Market & 2022H2 Opportunities: Looking at The Fundamental Mix, Alhaji Kurfi Garba MD/CEO Apt Securities & Funds Ltd
- Power of Price Action in identifying Opportunities in Any Market Cycle, , Mr. Abdul-Rasheed Oshoma Momoh, Head Capital Market at TRW Stockbrokers Ltd
- State of the Economy & Impact Doubling on Company Earnings in Negative Real Rate Of Return Environment. , Mr. Ambrose Omordion, Chief Research Officer, Investdata Consulting Ltd
Takeaway from the master class
- Identifying profitable sectors and industries to hedge against inflation & down market
- Growing your wealth through commodity-backed assets on the NGX
- The power of double earnings on the share prices and performance of companies
- Trading companies’ earnings with technical tools for higher returns
- Why all you need to make money in equity trading is price
- The strength of NGX sectorial indexes in picking profitable trades
- 5 Hot Stocks to beat inflation and grow your portfolio
- Taking your trading to next level
- Confidence to trade any market cycle
- Set trading goals that will take processes, not financial goal of doubling money, or earning by 100%
- Teach you how to handle your trading and decision making yourself
- Trading your plan as pathway to higher results and stronger bottom-lines
Don’t miss this ultimate source of knowledge about the market, if you desire financial independence through profitable trading, investing, and wealth-building for the rest of the year and beyond.
Date: July 2, 2022
Time: 9.am – 4pm
Smart investors and traders know that highly volatile markets create exceptional opportunities, while novice and amateur traders can often have a different response to volatility, which leads to FEAR.
Fear is the root cause of so many costly trading behaviors…hesitation to pull the trigger, incorrect position sizing, chasing the trend, and, market wave as a result of lack of trading plan and objective.
If you want to be on the list of successful investors and traders in Q3 2022, send STOCK to 08028164085, 08179547605 now.
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605