Market Update for July 16
Ahead of the interim dividend paying season on the Nigerian Exchange, the composite NGX All-Share index, on Tuesday, sustained a positive momentum to cross the 100,000 psychological line again amid buying interests across some major sectors. There were also portfolio reshuffling ahead of more corporate earnings inflow as players digest the latest macroeconomic reports and the likely outcome of the upcoming policy meeting next week at a time the latest International Monetary Fund’s downgrade of Nigeria’s economic growth projection to 3.1% from 3.3% blaming the harsh economic climate.
Buying sentiments increased with positive market internals in the midst of low traded volume, thereby extending the bull transition for three consecutive sessions. So far, the T-Line has become a strong support level for the benchmark index’s action, given that every single change in any market and economic condition is a life changing opportunity for wealth creation among players that understand the big picture of the market and economy.
The market continues trading within the value area, creating entry opportunities for discerning investors and smart traders, even as trading volume pattern and money flow index signal an uptrend that needs confirmation at this demand zone in expectation of half-year earnings and dividend announcement. This new uptrend could be sustained on the back of the expected company numbers and momentum that comes with earnings reporting season.
The NGX index’s action is trading above the T-line and the two moving averages of 50-EMA and 50-SMA in the midst of changing market fundamentals and technicals. This is an indication that relative strength is returning to the market. 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, due to the continued mismatch of these and previous ones. There are also issues with the implementation style in the face of oscillating oil production output even as the Naira continues to depreciate at a time that oil is selling below $84 per barrel at the international market.
Nigerian Breweries on Tuesday notified the exchange of its closed period and board meetings, just as more companies informed the NGX of their forthcoming Annual General Meetings. Similarly, some others presented resolutions at such meetings with the latest coming from Fidelity Bank, while GTCO opened its offering opens. Airtel Africa continued to update the market of its ongoing share buyback, while United Capital informed the market of insider dealing of its shares. In the midst of all these, it is safe for investors to target companies with consistent track records of dividend payment, strong fundamentals and growth prospects that will support further growth in earnings which price feeds on in any market cycle.
Technically, the NGX is recovering on a positive momentum as revealed by the candlestick formation and mixed momentum indicators. As ADX was down at 16.92, while RSI and Money Flow Index were up to read 57.41 and 47.52 points against the previous session 55.83 and 46.78 points respectively. Market players should watch this current trend and trade wisely in the face of funds entering the market on position taking. Also, trading volume pattern continued to oscillates, suggesting buying interest and profit taking in some sectors in the midst of wait and see attitude ahead of more half year numbers.
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Oil price on Tuesday pulled back to continue its oscillation, as it trades at $85.05 per barrel in the midst of stronger dollar and fear of demand, As China weak macroeconomic data and trade war with the west remain a concern for market players across the globe. As increasing geopolitical tension across many economies threats economic activities in the face of cooling inflation pointers to rate cuts. This trend may likely continue in 2024, while the up and down movement continues to drive volatility, even as ceases fire discussion is ongoing to resolve the Middle East conflict, even as the raging war between Ukraine and Russia continues to influence global oil supply and demand.
Tuesday’s trading opened in the green and it was sustained for the rest of the session, despite oscillating on buying interest in financial services stocks and others in the midst of profit taking in some sectors. This situation pushed the NGX’s index to an intra-day high of 100,077.30bps from its lows of 99,891.74bps, before closing above its opening level at 100,075.60bps.
Market technicals for the session were positive and strong with higher volume 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 99% buy position and 1% sell volume. The total transaction volume index stood at 0.68 points, just as energy behind the day’s performance was relatively strong as Money Flow Index inched up to read 47.52pts, from the previous day’s 46.78pts, indicating that funds entered the market.
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Index and Market Caps
The benchmark NGX All-Share Index gained 109.31 basis points, closing at 100,075.59bps after opening at 99,971.64bps, representing a 0.10% up. Market capitalization rose by N62.03bn, closing at N56.67tr from the previous day’s N56.61tr, which also represented a 0.10% value gain.
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Meanwhile, the upturn was driven by accumulation in the shares of Ucap, Zenith Bank, Wapco, Cornerstone, Sunu Assurance Cutix and FBNH among others. This impacted mildly on Year-To-Date growth as it inched up to 33.75%, while Market capitalization YTD gain fell to N12.08tr, representing 38.35% above its opening level for the year.
Mixed Sector Indices
The sectoral performance indexes were mixed, save for the NGX Energy and Consumer goods index that closed lower by 0.26% and 0.07% respectively, while the NGX Insurance index led the advancers after gaining 0.67%, followed by Banking and Industrial goods with 0.61% and 0.07% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 19:14, while activities in volume and value were up after players exchanged 368.4m shares worth N7.42bn. Volume was driven by trades in Zenith Bank, Accesscorp, GTCO, Jaiz Bank and UBA.
United Capital and Cutix were the best performing stocks, gaining 10% and 9.84% respectively, closing at N33.00 and N5.85 per share respectively on dividend news and sentiment. On the flip side, Redstar Express and Deap Capital lost 9.82% and 5.77% respectively, closing at N3.95 and N0.49 per share, purely on selloffs and profit taking.
Market Outlook
We expect mixed sentiments and bargain hunting to continue ahead of policy meeting outcome next week and interim dividend expectation in the midst low valuation. As portfolios repositioning continue, while 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.
Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
08028164085
