Bull Sentiments Still On Quarter-end Window Dressing, Market Supportive Fiscal Reforms, News

Market Update for June 27
Trading activities continued Tuesday on the Nigerian Exchange amid quarter-end window dressing and optimism over the impact of government’s complementary market reforms on the economic and financial sector and their ability to birth a progressive nation, and attract both foreign and domestic investment.
There was buying pressure and positive sentiments for blue chip companies and highly capitalized stocks which impacted the benchmark NGX All-Share index positively as it closed higher on an above-average traded volume and positive market breadth. This extended the back-to-back gains for a second consecutive session as it formed a saucer chart pattern that support a bullish or uptrend move as the NGX index’s action crossed the recent strong resistance and 60,000 psychological line on increased momentum. This triggered a new uptrend on the daily chart that requires confirmation after the holidays declared by the Federal Government to celebrate the Islamic festival of Eid el Kabir. The high volume recorded signals that buyers are in control, despite the seeming profit taking.
The index remained above the 60,000 mark on an increased buying sentiment, trading at its 16-year market high on an above average traded volume of transaction. In the process, many stocks hit new 52-week highs on inflow of fund and an expected fall in interest rates as the government looks to reform monetary policy after the recent unification the foreign exchange rates that made the stocks on the exchange cheaper and attractive for foreign investors.
Major sectors of the market witnessed buying interest on the inflow of funds as investors and traders took position in low, medium and high cap stocks, even as many company’s dividend yield become lower yet, ahead of the Q2 earnings reporting season. This was as more quoted companies notified the exchange and investors of insider dealings, their closed periods and board meeting dates to approve the half-year financials. During the session, March year-end accounts such as NNFM, Learn Africa and University Press, released their audited financials with mixed performance with dividend recommendation of 35 Kobo, 25 Kobo and 10 Kobo respectively.
The NGX is currently trading above its T-line, 100-Day Simple Moving Average and 200DMA on the daily and weekly chart, while heading to the 60,442 basis points level again, with more stocks making new highs on the positive sentiment towards government economic and financial market reforms. This calls for a change in trading strategies and caution, amid the possibility of profit taking and correction. As such, technical traders and discerning investors must be guided, because higher prices will lead to lower dividend yields, even when market Price to Earnings Ratio is relatively low. It however provides better opportunities for investors to hedge against inflation even when fixed income market yields look attractive and remain mixed in the face of high inflation.
To navigate the rest of the quarter and year profitably using fundamental and technical analysis to run, join investdata 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 bull-run. Despite the mixed volume pattern witnessed recent days, it is time to go shopping for undervalued stocks, sector rotation, go for defensive stocks and the next insider playing opportunity,
Meanwhile, oil price oscillation continued as it pulled back to trade at $71.85per barrel in the midst of fear of global recession on continued rate hike and mixed macroeconomic data from the two world largest economy that had been a concern for market players. Even as the Russia-Ukraine war remain a 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.
Tuesday’s trading started in the green and was sustained for the rest of the session, on positioning across the sectors and highly priced stocks a situation that pushed the NGX All-Share Index to an intraday high of 60,109.41bps, from its lows of 59,315.04ps, before closing above it opening figure at 60,108.86 point.
Market technicals were positive and strong with a higher volume traded when compared to the previous session in the midst of breadth favoring the bulls on a buying pressure sentiment as revealed by Investdata’s Sentiments Report showing 100% buy position and 0% sell volume. The total transaction volume index stood at 1.24 points, just as momentum behind the day’s performance was strong, with Money Flow Index reads 83.12pts, from the previous day’s 82.32pts, indicating that funds entered the market.
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Index and Market Caps
At the end of Tuesday’s session, the composite NGX All-Share Index gained 772.98bps, closing at 59,477.70bps, from its 59,477.70bps opening level, representing a 1.30% growth. Market capitalization rose by N421.20bn to N32.73tr, from the previous day’s N32.38tr, which also represented a 1.30% value gain.
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Meanwhile, Tuesday’s upturn was driven by accumulation in the shares of MTNN, Dangote Cement, Zenith Bank, GTCO, UBA, Total, Seplat, Accesscorp, Ikeja Hotel, NB, Lafarge Africa, Dangote Sugar and Eterna, among others. This impacted positively on Year-To-Date gain, which increased to 16.25%, while Market Capitalization YTD gain went up to N5.10tr, representing 17.22% above its opening level for the year.

Bullish Sector Indices
Sectoral performance indexes closed higher, led by the NGX Banking index, which gained 3.5%, followed by Oil/Gas, Consumer, Industrial and Insurance with 3.2%, 0.4%, 0.2% and 0.2% respectively.
Market breadth was positive as gainers outpaced losers in the ratio of 51:13, while transactions in volume and value were up after players exchanged 763.7m shares worth N12.5bn, driven by trades in, Accesscorp, GTCO, UBA, SterlingNG and Zenith Bank.
Transcorp Hotel and Ikeja Hotel were the best performing stocks, gaining 10% each, closing at N21.29 and N3.63 per share respectively, on positive market forces and corporate action of 7 kobo dividend/ bonus share of 1 for 3 held. On the flip side, Redstar Express and C & I Leasing lost 10% and 9.8% respectively, closing at N3.15 and N3.50per share, purely on profit taking.

Market Outlook
We expect the bullish sentiment to continue on window dressing by fund managers and market supportive reforms of the government, just as more policy pronouncements and appointments would offer investment direction. Also, Q2 earnings reporting season draws closer to confirm the real state of the company performance and attract liquidity in the midst of markdown dates and the release of more march year end audited accounts.
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. Also looking at the trends and events across the globe and domestically.

Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605