Amid Mixed Sentiments, Profit Taking Ahead, As NGXASI Approaches New Peak

Market Update for September 19

The positive sentiments and momentum on the Nigerian Exchange continued on Tuesday, amid increased buying interests by market players across highly priced, low and medium cap companies. This is coming ahead of the next policy meeting of the Central Bank of Nigeria (CBN), quarter end window dressing by fund managers and others as the market approaches another peak, signaling a continuation or reversal. Also, Q3 earnings reporting season draws closer with mixed expectations due to the ongoing fiscal reforms by government, as well as foreign exchange market challenges that had persisted.
It is obvious that the mixed macroeconomic data such as inflation hitting eight-month high at 25.8% in the midst of an unclear direction in fixed income rates and yields which has triggered inflow of funds into the equity space in search of safety in dividend stocks and capital gains. This will help investors hedge against inflation as factors putting pressure on prices continued to increase.
The financial sector has shown resilience all these while, due to the high quality of assets management and consistent profitability that has supported steady reward for shareholders in form of dividends. Even when profit taking hit UBA, investors had continued to position in other banking stocks as the banks recent scorecards had shown impressive half-year earnings performance that will support higher dividend payout at the end of the year, even as all eyes are on their Q3 numbers that are likely to hit the market earlier in October.
The benchmark NGX All-Share index closed higher on a very high traded volume and positive market breadth to extend it three consecutive sessions of bull transition, heading to another level of breakout or fakeout, so it is important that we trade and invest wisely ahead of events and factors that will shape the market in the final quarter of this year. The bullish momentum witnessed in recent trading sessions, and the market’s big uptrend remains intact as investors await the scorecards of Accesscorp, AXA Mansard and CHI Plc, and interim dividend announcements. Other factors include the outcome of next week’s Monetary Policy Committee meeting amidst material shift of the index and the ongoing volatility.
In the midst of all these, investors should trade consumer and industrial goods with caution while repositioning their portfolios, the targeting services industry stocks with strong fundamentals and earnings power capable of supporting price and higher dividend payment at the end of the year. These are against the backdrop of the changing market conditions and trading environment due to macroeconomic headwinds, mixed corporate earnings and the prevailing mixed outlook for fixed income instruments yields and rates in the face of rising inflation, high interest rate and exchange rate challenges due to the high volatility in the exchange.
NGX index action still trade in the consolidation range after forming an ascending triangle, while being above the T line that signals entry into the markup phase that indicates a buy market. However, let us wait to confirm continuation as profit taking is imminent. The candlestick formation at the end of the session signals a bullish pattern that supports a new uptrend, just as the 2008 resistance level turned another strong support level to watch.
To navigate the rest of the quarter and year profitably using fundamental and technical analysis, join investdata’s live sessions at noon every 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 selloffs. 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 oscillation continued, as it pulled back sharply to trade at $93.47 per barrel in the midst of demand fear and supply tighten as a result of by Saudi Arabia and Russia production cut, as new rate waves underway. The Russia-Ukraine war remains a major concern, the prevailing high interest rate regime and slowing inflation. Also, supply tightened due to the Russia-Ukraine conflict that entered the second year. This up and down movement in oil price, has continued to drive volatility across markets.
Meanwhile, Tuesday’s trading started in the upside and was sustained throughout the session on accumulation in some consumer goods stocks and others during the session. This pushed the Index to an intraday high of 68,370.90bps from its lows of 67,878.20bps, before closing above the opening figure at 68,359.22bps.
Trade metrics were positive and mixed with a higher volume traded when compared to the previous session in the midst of breadth favoring the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 98% buy position and 2% sell volume. The total transaction volume index stood at 1.47 points, just as the momentum behind the day’s performance was strong, with Money Flow Index reading 67.17pts, from the previous day’s 66.94pts, indicating that funds entered the market.
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Index and Market Caps
At the end of Tuesday’s trading, the composite NGXASI gained 482.05bps, closing at 68,359.22bps, from its 67,877.17bps opening level, representing a 0.71% growth. Market capitalization also rose by N263bn to N37.41tr, from the previous day’s N37.15tr, which also represented a 0.71% appreciation in value.
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Tuesday’s upturn was driven by buying interests and position taking in BUA Foods, Oando, Stanbic IBTC, GTCO, Etranzact, Chams, CHI Plc and Livestock Feeds, among others. This impacted positively on Year-To-Date gain which increased to 33.38%, while Market Capitalization YTD gain stood at N8.62tr, representing a 35.46% rise above its opening level for the year.

Bearish Sector Indices

Sectoral performance indexes were in red, save for NGX Consumer Goods that closed 3.07% higher, while NGX Insurance led the decliners after losing 0.37%, followed by Energy and Banking with 0.16% and 0.11% respectively, as NGX Industrial goods finished flat.
Market breadth was positive with gainers outnumbering losers in the ratio of 35:27, while activities in volume and value were mixed after stockbrokers traded 676.74m shares worth N5.90bn, driven by trades in Universal Insurance, which on Monday reported the exit of two key officials including and executive director. Others are UBA, Transcorp, Fidelity Bank and Chams.
Ellah Lakes and Berger Paints were the best performing stocks, gaining 10% and 9.95%, respectively, closing at N3.63 and N11.60 per share respectively, on market forces and sentiments. On the flip side, SCOA and NSLTech lost 10% each, closing at N1.26 and N0.27 per share, purely on the back of selloffs.

Market Outlook
We expect mixed sentiments on positive momentum and profit taking as the market approach another peak of breakout or fakeout ahead of the expected half-year earnings reports of Accesscorp and MPC meeting in the midst of portfolio reshuffling for quarter end and continued sector rotation.
However, pullbacks are creating buying opportunities amidst the economic reforms of the government, just as more policy pronouncements and economic managers hit the ground running, a situation expected to offer investment 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.

Theme Thriving In A Changing Macroeconomic Climate: Identifying Opportunities, Waves & Paths On NGX
1. Navigating Market Dynamics: Insights For Profitable Strategies- Alhaji Garba Kurfi, MD/CEO APT Securities & Funds Ltd)
2. Mastering Market Volatility: Chart & Analysis For Higher Returns- Mr Abdul-Rasheed Oshoma Momoh, Head Capital Market at, TRW Stockbrokers Ltd
3. The Power of Macroeconomic Data In Equities’ Trading & Investing- Mr Olatunde Amolegbe, MD/CEO, Arthur Steven Asset Management Ltd
4. Understanding The Link Between Fundamental, Technical and Sentiment Analyses In Picking Stocks- Mr Ambrose Omordion, CRO, Investdata Consulting Ltd.

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CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605