Market Update September 21
The bulls and bears continued their battle on the Nigerian Exchange Tuesday as the benchmark index moved marginally to the south, thereby extending the bear-run for a second successive session on mixed sentiments and low traded volume. Market breadth was positive as bargain hunters gradually position in some stocks that recently suffered losses.
Tuesday’s NGX index action broke down its strong support level of 38,900.92 points after sideways trending for six trading session to fake out ahead of quarter-end and onset of the Q3 earnings reporting season.
Despite the retention of policy instruments by the Monetary Policy Committee (MPC) last week, the flat 7.20% rate for 364-day Treasury bills, and positive economic data ranging from a Q2 GDP growth of 5.01%, declining inflation for five straight months and improvement in Purchasing Managers Index according to reports from the National Bureau of Statistics and Central Bank of Nigeria, equities trading activities on the Exchange had maintained its weak and side-ways movement before pulling back again. Although impressive corporate earnings had been received till date, we are of the opinion that position taking for third quarter earnings should commence any moment from now. Also noteworthy is the fact that corporate actions for dividend payment will continue to influence market performance as occurred when the share price of Stanbic IBTC Holdings was adjusted for the N1.00 interim dividend payment, ahead of those of UBA and others.
Tuesday’s trading started on the downside, despite oscillating mildly between the mid-morning to afternoon on profit taking and buying interests in medium and low-priced stocks. This situation pushed the NGX index to an intraday low of 38,849.57 basis points, from its highs of 38,906.82bps, after which it closed below the opening point at 38,873.85bps.
Market technicals were weak and mixed as volume traded was lower than that of the previous day with breadth favouring the bulls on mixed sentiments as revealed by Investdata’s Sentiment Report, showing 42% ‘buy’ volume and 58% sell position. Total transaction volume index stood at 0.81 points, just as the momentum behind the day’s performance was relatively weak, as Money Flow Index was flat at 25.79points, which was slightly down from previous day’s 25.92points, an indication that some funds left the market.
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Index and Market Caps
The All Share index NGXASI, at the close of trading, slipped 32.57 basis points lower, closing at 38,873.85bps, from its opening level of 38,906.42bps, representing a 0.08% drop, just as market capitalization lost N17bn, closing at N20.25tr, from the opening value of N20.27tr, also represented 0.08% value loss.
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The day’s downturn was driven by selloffs in Access Bank, GSK, Flour Mills, Zenith Bank, and GTCO, among others, thereby impacting mildly on Year-To-Date loss that rose to 3.47%, just as the cumulative loss in market capitalization stood at N803.22bn, representing a 3.81% decline from the year’s opening value.
Mixed Sector Indices
Performance indexes across sectors were mixed, with the NGX Banking index closing at 0.97% down, while the NGX Industrial Goods Index led the advancers by gaining 0.08%, followed by Insurance, as well as Oil/Gas with 0.07% and 0.06% respectively.
Market breadth was positive, as gainers outnumbered losers in the ratio of 16:13, while activities in volume and value terms were down after stockbrokers traded 184.44m shares worth N2.34bn, compared to the previous day’s 190.91m units valued at N2.35bn. The day’s volume was driven by trades in UBA, GTCO, Zenith Bank, United Capital and Access Bank.
MRS Oil and Veritas Kapital Assurance were the best performing as they gained 9.75% and 9.52% to close at N15.20 and N0.23 per share respectively on market forces. On the flip side, Neimeth Pharm and Chams lost 7.89% and 4.35% respectively, closing at N1.75 and N0.22 per share purely on profit taking.
Market Outlook
We expect the mixed trend to continue as investors and traders utilize the market’s pullbacks to position, while many stocks are trading within their buy ranges, a situation expected to attract funds into the equity space, given the Dividend Yield capable of serving as a hedge against inflation.
Also, institutional investors and others continue to digest recently release economic data ahead of month and quarter end, as well as the continued repositioning of portfolios for the year’s last quarter. Also, investors are still observing the interplay of forces in the FX market as the CBN gives a guideline for the new digital currency platform. The day’s low volume suggests that institutional investors and others are still cautiously looking at the economic data and policy direction of the economic managers. It is noteworthy that oil price pullback in the international market; corporate actions, as well as the interim dividend possibilities, are around the corner.
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