The bulls regained control of the Nigerian Exchange at the midweek, bringing the benchmark NGX All Share Index to a positive close, thereby extending the recovery mood for the second consecutive session on low traded volume and positive market breadth. There were sentiments and momentums following the pullbacks in industrial goods, banking, and energy indices.
Stocks are fantastic financial instruments to trade if you understand timing and season using dates and technical tools to guide your entry and exit strategies, and when it comes to trading, there are different thinking among players, as they are classified into dividend-paying, growth, and value stocks, among others. Here you get to understand what is happening in each sector and how such will influence company performances positively or otherwise, because equity prices feed on company earnings. Also you look at market cap to know where a company, or stocks belong, whether large, medium and low cap, to help you evaluate each, because stocks can be cheap and expensive at different phases of the market.
The new market rally seeks direction and confirmation at this stage, which is why the two trading sessions of rebound is good news for the market, only until a breakout of 51, 804.21 level is confirmed. The NGX index is trading near a buy point, because buying interests have improved from the previous sessions to signal that an uptrend is underway as end of quarter and earnings season draw closer. Also, bargain hunters are taking advantage of market pullback to reposition in value stocks that recently suffered losses especially the interim dividend paying companies.
To avoid the old mistakes and costly losses of the past in this changing market momentum, we invite you to attend the Investdata Q3 Master Class, ahead of the half-year earnings reporting season and general elections. We note that the major political parties just concluded their primaries to select presidential candidates ahead of the February 2023 general election. Current developments in the market do suggest that discerning investors are gradually becoming greedy, while others are fearful, while actively buying more, as seen in the recent market corrections. Despite the selling sentiment witnessed before now, it is time to go shopping for undervalued stocks, sectors and hot stock opportunities for this market.
Oil prices continued to oscillate in the international market, even as it trades at $111.70 per barrel, as the US economy for the first time since 1976 is set to outgrow China which has been slowed down by its zero COVID strategy, thereby impacting the demand for oil. This has been helped also by the discovery of new rigs in the US, just as the EU plans to cap gas prices in the midst of the embargo placed on the importation of Russian oil. There is a palpable worry that these chronic high energy prices continue killing the global economy, heightening inflationary pressures across the globe on a weak economic outlook. This is also influencing the monetary policies of central banks as they move to checkmate the impacts of the Russia-Ukraine conflict on the global economy to avoid economic recession. Nonetheless, Nigeria’s soaring inflation is a potent threat to its fixed income market and investment yields, which should be an indication that there will be a reversal of funds flowing to the equity space in no distant time as institutional investors balance their portfolios.
Technically, the NGX index action looks good on its reversal but needs to breakout the ‘T-Line’ and 20-day moving average to confirm strong strength behind the new move, as the market remains relatively strong, despite the mixed outing since the beginning of the week. The strong resistance level has been within the 51,800-basis points region, while volatility persists and corrects towards the next breakout is sported around 51,532.71bps. Should the index break this point, the next visible resistance is 51,747.43bps.
The possibility of the trend being sustained is high and a function of market forces and improved economic conditions during this month and beyond, following which we advise investors to play defensive stocks and reduce investment risks around the market. This, they can do by effectively using your stop-loss and trading your plans always by allowing your entry and exit strategies to guide you.
Meanwhile, midweek’s trading opened slightly on the upside and oscillated into the afternoon before extending its gains on bargain hunting in agribusiness stocks and other blue-chip companies. This pushed the NGX’s index to an intraday high of 51,377.21bps from its lows of 50,628.41ps before closing above its opening points at 51,377.21bps.
Market technicals were positive and strong, as volume traded was higher than the previous day in the midst of breadth favoring the bulls on buying pressure as revealed by Investdata’s Sentiments Report showing 100% buy position. The total transaction volume index stood at 0.69 points, just as momentum behind the day’s performance was relatively weak as Money Flow Index is looking up at 37.55pts, from the previous day’s 31.285pts, indicating that funds entered the market.
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Index and Market Caps
The NGX All Share index, at the end of midweek trading gained 285.46bps, closing at 51,377.41bps, after opening at 51,091.75bps, representing a 0.56% rise. Similarly, market capitalization rose by N153.90bn, closing at N27.70tr, from the previous day’s N27.54tr, which also represented a 0.56% appreciation in value.
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The session’s upturn was driven by buying interests in Presco, Flour Mills, Lafarge Africa, BUA Foods, Dangote Cement, Livestock Feeds, MTNN, Royal Exchange, Access Corp, FBNH, Ellah Lakes and Stanbic IBTC, among others. This impacted positively on Year-To-Date gain, rising to 20.28%, while market capitalization growth stood at N4.84tr YTD, representing a 24.09% rise over the opening level for the year.
Bearish Sector Indices
Performance indexes across sectors were down, except for NGX Consumer goods that closed higher with 0.14%, while NGX Banking led the decliners after losing 0.61% followed by Insurance, industrial goods and energy with 0.39%, 0.28% and 0.19% respectively.
Market breadth turned positive, as gainers outnumbered losers in the ratio of 18:16; just as transactions in volume and value terms were up, after investors traded 229.376m shares worth N3.20bn, with volume driven by trades in Oando, FCMB, UBA, Accesscorp and GTCO.
Ellah Lakes and Presco were the best-performing stocks, gaining 10% and 9.71%, closing at N4.40 and N183 per share respectively on market forces and Q2 earning expectation. On the flip side, NNFM and John Holt lost 9.91% and 9.86% respectively, closing at N9.55 and N0.64 per share, on profit taking and selloffs.
Market Outlook
We expect bargain hunting to continue as players take advantage of pullbacks in value stocks ahead of quarter-end window dressing and interim dividend season in Nigeria, while some March year-end audited accounts companies hit the market any moment from now. We note also the flow of funds into the fixed income segment on the rate hike by the CBN, as sector rotation persists and players digest the macro-economic data and earnings forecast released so far. Analysts are also expecting the inflation report to support recovery in the new July amid oil prices oscillation. Also, the market continues to interpret the rising inflation in relation to the crude oil price and other factors, in the midst of profit-taking and portfolio rebalancing. This will result in market players targeting fundamentally sound and dividend-paying stocks in the hope of dividend announcements.
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Q3 Investdata Master Class
Theme: Profiting From Asset Pricing In An Uncertain Market, Rising Rates Environment
- The State of the Market & 2022H2 Opportunities: Looking at The Fundamental Mix, Alhaji Kurfi Garba MD/CEO Apt Securities & Funds Ltd
- Power of Price Action in identifying Opportunities in Any Market Cycle, , Mr. Abdul-Rasheed Oshoma Momoh, Head Capital Market at TRW Stockbrokers Ltd
- State of the Economy & Impact Doubling on Company Earnings in Negative Real Rate Of Return Environment. , Mr. Ambrose Omordion, Chief Research Officer, Investdata Consulting Ltd
Takeaway from the master class
- Identifying profitable sectors and industries to hedge against inflation & down market
- Growing your wealth through commodity-backed assets on the NGX
- The power of double earnings on the share prices and performance of companies
- Trading companies’ earnings with technical tools for higher returns
- Why all you need to make money in equity trading is price
- The strength of NGX sectorial indexes in picking profitable trades
- 5 Hot Stocks to beat inflation and grow your portfolio
Benefits
- Taking your trading to next level
- Confidence to trade any market cycle
- Set trading goals that will take processes, not financial goal of doubling money, or earning by 100%
- Teach you how to handle your trading and decision making yourself
- Trading your plan as pathway to higher results and stronger bottom-lines
Don’t miss this ultimate source of knowledge about the market, if you desire financial independence through profitable trading, investing, and wealth-building for the rest of the year and beyond.
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Fee: 50K
Smart investors and traders know that highly volatile markets create exceptional opportunities, while novice and amateur traders can often have a different response to volatility, which leads to FEAR.
Fear is the root cause of so many costly trading behaviors…hesitation to pull the trigger, incorrect position sizing, chasing the trend, and, market wave as a result of lack of trading plan and objective.
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Ambrose Omordion
CRO|Investdata Consulting Ltd
ambrose.o@investdataonline.com
Tel: 08028164085, 08179547605
