Market Update for October 9
The Nigerian Exchange continued its recovery and bull run for the 10th consecutive trading session on Thursday, closing higher on a strong buying sentiment supported by price appreciation by highly capitalized stocks among others. All eyes are on economic data and Q3 company numbers that will start rolling in any moment from next week, beginning with early filers.
As such, this is the time for discerning investors and smart traders to reposition their portfolios by way of sector rotation and rebalancing across different classes of stocks ranging from low, mid and high caps in view of earnings power and growth potentials that will support price appreciation and high payout at the end of the day. Here, players should not worry about what the market is going to do, but how they will respond to the emerging market dynamics.
At the close of Thursday’s trading, the benchmark NGX All-Share index is set to breakout another all-time high, with the latest resistance level at 146,600.02 basis points all things being equal, with highly priced stocks supporting this recent rally on oscillating volume pattern that has been relatively below the average traded volume of the market. This is based on the volume that took the market to the all-time high before now and this recovery uptrend so far. The index’s action top pattern formation signals the possibility of a trend continuation, or pullback which needs confirmation as trading opens on Friday.
Meanwhile, position taking across the major sectors of the NGX continued ahead of the Q3 earnings reporting season as revealed by the buying sentiment in healthcare, insurance, industrial goods, aviation services and others with strong prospective of releasing impressive numbers that will influence prices positively. We note that emerging markets stocks remain undervalued, thereby attracting inflows in the midst of positive macroeconomic data that reveals some recovery and economic growth. The NGX’s intraday volatility continued as its composite All-Share index closed higher on a low traded volume and positive market internals, pointing to breakout of consolidation range.
During Thursday’s session, more notifications of closed period and board meetings to approve Q3 financials, insiders dealing updates, AGM notices and earnings forecast were received from companies. All eyes are on early filers next week.
In equity investing or trading time and timing are very important, because seasonality is one factor that will shape the market in this final quarter of this year. Despite the mixed sentiment witnessed so far and outlook of the market, the big uptrend remains intact above the T line and the 50-Day Moving Average, despite the ongoing volatility in the market and expectations.
The sustained uptrend at the end of Thursday’s trading creates bargain opportunities in the market, but investors should trade some high cap stocks with caution, while repositioning portfolios, targeting consumer goods, industrial, some banking stocks, agrobusiness, and insurance stocks. We would also add to the list, stocks of other services providers with strong fundamentals and earnings power capable of supporting price, and higher dividends payment at the end of the year. These are against the backdrop of new prices and improving macroeconomic indices, and strong corporate earnings. This is however, not forgetting the prevailing mixed outlook for fixed income instruments yields due to rate cuts, declining inflation and relatively stable exchange rate.
To navigate the rest of the quarter and year profitably using fundamental and technical analysis, join investdata’s live sessions at noon every Monday, Wednesday and Friday “and also get investdata technical toolbox and other training materials 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 trends. Despite the mixed volume pattern witnessed in recent days, it is time to shop for undervalued stocks, sector rotation, go for defensive stocks at the next insider playing opportunity.
Oil price on Thursday continued to oscillates, pulling back to trade at $65.22 per barrel in the midst of Gaza ceasefire deal and global supply with OPEC output increase weighing on the market due to oversupply concerns in the face Mideast uncertainty. Weak demand outlook in the face of production increase that may affect crude demand. Just as Russia-Ukraine war remains a major concern, as up and down movement in oil price remain also a concern, which has continued to drive volatility across markets.
Thursday’s trading started in the green and it was sustained throughout the session, despite oscillating on position taking and profit booking in blue chip companies and others, a situation that pushed the Index to an intraday high of 146,204.31 bps from its lows of 145.984.94ps, before closing above its opening figure at 146,203.40 bps.
Market technicals were positive and strong with lower volume traded, when compared to the previous session, in the midst of breadth favoring the bulls on a buying pressure as revealed by Investdata’s Sentiments Report showing 100% buy position and 0% sell volume. The total transaction volume index stood at 0.55 points, just as the energy behind the day’s performance was strong, with Money Flow Index reading 74.62pts, from the previous day’s 74.52pts, indicating that funds entered the market.
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Index and Market Caps
The benchmark NGXASI, at the end of Thursday trading gained 485.22bps, closing at 146,203.40bps, from its 145,719.05bps opening level, representing a 0.33% growth. Market capitalization also rose by N60.21bn to N92.79tr, from the previous day’s N92.50tr, which also represented a 0.32% appreciation in value.
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Thursday’s upturn was driven by buying interests and accumulations in high cap stocks such as Dangote Cement, MTNN, and GTCO, as well as Caverton, Eunisell, Mecure, IMG and SterlingNG, among others. This impacted positively on Year-To-Date gain which inched up to 42.05%, while Market Capitalization YTD gain stood at N47.6tr, representing a 47.85% rise above its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes were up, except for the NGX Oil & Gas that closed flat, while NGX Industrial goods led the advancers after gaining 0.67%, followed by, Insurance, Consumer goods and Banking with 0.64%, 0.46% and 0.26% respectively.
Market breadth was positive as gainers outpaced losers in the ratio of 32:21, while activities in volume and value terms were mixed, after players exchanged 346.98 million shares worth N27.42bn, driven by trades in Fidelity Bank, Dangote Cement, SterlingNG, Chams and Accesscorp.
Caverton and Eunisell were the best performing stocks, gaining 10% each, closing at N6.93 and N44.00 per share respectively, on expectation and market forces. On the flip side, FTN Cocoa and Tantalizer lost 6.67% and 3.35%, closing at N5.60 and N2.31per share, purely on the back of profit taking.
Market Outlook
We expect mixed sentiment on the back of the oncoming earnings season and profit taking in the midst of bargain hunting and portfolio repositioning ahead of Q3 corporate earnings reports and ongoing sector rotation, with all eyes are on September consumer price index reports.
However, pullbacks will create ‘buy’ opportunities amidst improving macroeconomic indices, just as more economic reforms will boost growth, a situation expected to support investment and market direction eventually.
We note that discerning investors have continued to target fundamentally sound companies and defensive stocks to protect their portfolios. Any pullback at this point may add more strength to upside potentials. As such, investors should take advantage of price rally to take profit, while also looking at the trends and events across the globe and domestically.
Ambrose Omordion
CRO|Investdata Consulting Ltd
ambrose.o@investdataonline.com
Tel: 08028164085, 08179547605
