Market Update for September 25
The bull run on the Nigerian Exchange continued at the midweek amid positioning ahead of quarter end window dressing by fund managers and market operators. The Q3 earnings reporting season draw closer to usher in seasonality and momentum necessary for discerning investors and smart traders to take advantage of sentiments that create wealth, especially attendees of the Investdata Mastermind Session holding this weekend.
Bargain hunting continues while market players digest the latest rate hike by the Central Bank of Nigeria, and position taking for end of the year seasonality and sentiments that comes with the last quarter of the year across the globe, especially with the renewed interests in energy and oil stocks due to the expected impact of monetary policy easing in mature economies expected to drive consumption and economic activities. Given the current state of the market with likely continuation of trend or pullbacks, it is an opportunity to buy into undervalued and fairly priced companies as revealed by their half-year corporate numbers and price to earnings ratios ahead of their Q3 scorecards.
This recovery and markup phase are different dynamics of stock market that require effective strategies to navigate and follow. It is expected that smart money will take advantage of the low valuation in the market to buy into value and defensive stocks that will support this rally as all eyes are on Q3 numbers.
Already, companies have started notifying the market of their closed period and board meeting to approval their scorecards. The rebound of some companies that seen profit taking or selloffs creates another opportunity for new entrants who understand the big picture and market dynamics.
The NGX index’s action has displayed strength and positive momentum, trading above the T-line and the two moving averages of 50-EMA and 50-SMA that indicates uptrend in the midst of changing market fundamentals and technicals. We note that the economic reforms of the government, measured by the outpouring of fiscal and monetary policies are yet to put the nation’s economy on the path of recovery, despite the seeming slowdown inflation and mixed macroeconomic data. There are also issues with the implementation style amid the oscillating oil production output even as the Naira continues to depreciate at a time that oil is trading below $75 per barrel at the international market.
Technically, the NGX is bullish, but forming a double top chart pattern, that signaled correction underway before the expected corporate numbers start hitting the market as revealed by the candlestick formation and momentum indicators. As ADX inched up at 21.91, while RSI and Money Flow Index were up to read 68.18 and 75.51 points against the previous session 64.77 and 68.97 points respectively. Market players should watch this current trend and trade wisely in the face of funds entering the market on buying sentiment in some sectors and profit taking in others. Also, trading volume pattern continued to oscillates, suggesting accumulation and selloffs in some sectors in the midst of players digesting Q2 banking earnings, as all eyes are on Fidelity Bank and UBA results.
To navigate the rest of this quarter and beyond profitably using fundamental and technical analysis to run, join investdata live sessions at noon every Monday, Wednesday and Friday trading day “and also get investdata technical toolbox to play the current state of the market do suggest that discerning investors are gradually becoming greedy, while others are fearful, as seen in the recent range market. Despite the oscillating volume of transaction witnessed in recent time, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.
Oil prices at midweek fell to continue its oscillation, as it trade at $71.40 per barrel in the midst of fear of oversupply as OPEC plan to increase production and mixed macroeconomic from US and China, despite tropical storm and low US inventories. Just as the rising geopolitical uncertainties across many economies is a threat to the global economy. This trend may likely continue for the rest of 2024, while the up and down movement continues to drive volatility, even as the raging war between Ukraine and Russia continues to influence global oil supply and demand.
Meanwhile, trading opened in the upside and was sustained throughout the session, despite oscillating on buying interest in highly priced and others, a situation that pushed the NGX’s index to an intra-day high of 99,101.04basis points from its lows of 98,566.49bps, before closing above its opening level at 98,987.42bps.
Market technicals for the session were positive and mixed with lower volume when compared to the previous session in the midst of breadth that favour the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 79% buy position and 21% sell volume. The total transaction volume index stood at 1.24 points, just as impetus behind the day’s performance was strong as Money Flow Index was up to read 75.51pts, from the previous day’s 68.97pts, indicating that funds entered the market.
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Index and Market Caps
At the end of the day trading, the NGXASI gained 418.83bps, closing at 98,987.42bps after opening at 98,568.59bps, representing a 0.42% growth. Market capitalization rose by N241bn, closing at N56.88tr from the previous day’s N56.64tr, representing a 0.42% appreciation in value.
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 oversold range has increased as market correction and volatility call for intelligent trading and positive chart patterns to be on our watchlist. These stocks have potentials to retrace, considering their earnings prospects and the oscillating moves in an upmarket and weak 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.
The upturn was driven by position taking in the shares of Seplat, Oando, Wapco, Flourmill, Nascon, UBA, Honeywell, Ellah Lakes and ABC Transport among others, which impacted positively on Year-To-Date gain as it increased to 32.38%, while Market capitalization inched up to N12.24tr, representing 39.07% above its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed with the NGX Banking and Insurance index closing 0.70% and 0.35% lower respectively, while the NGX Oil/Gas index led advancers after gaining 3.27%, followed by Consumer and Industrial goods with 0.50% and 0.03% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 29:24, while transactions in volume and value were mixed after investors exchanged 603.30m shares worth N12.58bn. Volume was driven by trades in Fidelity Bank, FBNH, Transcorp, UBA and Mansard.
Seplat Energies and Flour Mills were the best performing stocks, gaining 10% each, closing at N4, 103.10 and N60.50 per share respectively on the back of market forces and expectations respectively. On the flip side, Multiverse and Caverton lost 9.90% and 9.86% respectively, closing at N9.10 and N3.29 per share, purely on profit taking.
Market Outlook
We expect mixed sentiment to continue on bargain hunting and profit taking ahead of quarter-end window dressing and Q3 earnings session. Also, sector rotation continues in the market, with investors taking advantage of pullbacks to buy into value.
This is amid the volatility and pullbacks that add more strength to upside potential. Consequently, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.
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Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
08028164085
