Market Update for October 30
The bullish outing on the Nigerian Exchange continued Monday, the first trading session of the week, ahead of month-end as the benchmark index closed in the green due to increased buying interests in highly priced stocks and blue-chips. The index’s action rebounded sharply to breakout the 68,000 psychological line again as it traded within the consolidation range, and at the same time signaling the markup phase on a high traded volume that revealed strong move in the market at this key level. It is no news that last week was eventful, marked by the influx of impressive corporate earnings reports at its peak, even as window dressing is underway, as the market enters into the last quarter of the year amid portfolio rebalancing and seasonality.
The better-than-expected corporate earnings despite the gloomy economy has impacted the market positively at a time the rising inflation has left fixed income market instrument in negative real returns. These strong numbers came majorly from the service oriented companies on the exchange, cutting across banking, insurance, energy, power, agribusiness, construction and aviation service companies. Also, Okomu Oil and Mansard announced interim dividend of N4.50 and 6 kobo respectively, even amid hopes for more earnings inflow that would give an insight into dividend possibility at the end of the year which will support prices at this current levels and even beyond. So, market players will be looking at these company’s earnings and dividend yields to hedge against inflation, despite the relatively high yields in money market now.
Position taking and positive momentum weighed on the key NGX All-Share index as it closed higher on improved volume and positive market breadth. The buying pressure witnessed at the end of trading has been revealed by the candlestick formation, which continuation or reversal needs to be confirm as the market opens for the last trading session of the month. The benchmark index still trades above the 68,000 points psychological line, as it trades above the T line to remain within the consolidation range heading to breakout the strong resistance level of 68,459.19 on a high volatility that associates with earnings reporting seasons and last quarter seasonality.
Market recovery at this level has created opportunities to buy and, at the same time, sell, depending on trading plans. Smart money is gradually repositioning their portfolios amid rising inflation and high Monetary Policy Rate. Already, the outlook for fixed income market yields remains mixed even with the latest higher rates in TB primary market auctions, while the bond market remains bearish in the face of the rising inflation. On the strength of higher dividend payouts due to these earnings reports, funds are flowing into the equity space as revealed by the money flow index, market players should continue to take advantage of the ongoing oscillation and pullbacks in some major sectors of the market to reposition their portfolios as year-end of many companies draw closer.
The ongoing geopolitical tension will continue to drive global and domestic market volatility, so investors and traders anywhere in the world should factor in this uncertainty to their trading and investment plans always. it is important that you trade and invest wisely ahead of events and factors that will shape the market in this last quarter of this year. Despite the mixed sentiment witnessed so far, the market’s big uptrend remains intact, in the midst of a material shift in the index and the ongoing volatility.
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 mixed trend and volume pattern, 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 trades at $87.97 per barrel in the midst of cautious trading and selloffs by traders in the face of middle east conflict. Even when there is supply cuts. However, cooking Inflation outlook remain mixed on the back of geopolitical tensions across the globe today, at a time the Russia-Ukraine war entered its second year, and remains a major concern, aside the prevailing high interest rate regime, despite the recent pause. The supply tightened due to the Russia-Ukraine will drive up and down movement in oil price, which also drive market volatility across the globe.
Monday’s trading opened in the upside and was sustained throughout the session on buying interests across the major sectors on the strength of earnings and others. This situation pushed the Index to an intraday high of 68,111.71bps from its lows of 67,134.14ps, before closing sharply above its opening figure at 68,111.71bps.
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 sentiments as revealed by Investdata’s Sentiments Report showing 100% buy position and 0% sell volume. The total transaction volume index stood at 1.05 points, just as the energy behind the day’s performance was strong, with Money Flow Index reading 69.88pts, from the previous day’s 68.586pts, indicating that funds entered the market.
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Index and Market Caps
The benchmark NGX All-Share Index at the end of trading gained 975.13bps, closing at 68,111.71bps, from the 67,136.58bps opening level, representing a 1.45% growth. Market capitalization also rose by N535.71bn, closing at N37.42tr, from the previous day’s N36.89tr, which also represented a 1.45% appreciation in value.
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Meanwhile, Monday’s upturn was driven by accumulation and buying interests in shares of NNFM, UACN, NAHCO, Dangote Cement, NB, Stanbic IBTC, GTCO, UBA, Zenith Bank, Etranzact and Accesscorp, among others, impacting positively on Year-To-Date gain which jumped to 32.90%, while Market Capitalization YTD gain stood at N9.26tr, representing a 34.05% rise above its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes closed green, save for NGX Energy that closed flat, while NGX Industrial goods led the advancers after gaining 2.99%, followed by Banking, Insurance and Consumer goods with 1.20%, 0.86% and 0.45 respectively.
Market breadth wad positive as gainers outnumbered losers in the ratio of 42:16, while activities in volume and value terms were up, after players exchanged 430.39m shares worth N8.26bn, driven by trades in Universal Insurance, UBA, Custodian Investment, Transcorp and Zenith Bank.
NNFM and UACN were the best performing stocks, gaining 10% and 9.54% respectively, closing at N18.15 and N14.35per share respectively, on strong earnings. On the flip side, Meyer and Abbey Building lost 9.87% and 9.71%, closing at N2.74 and N1.86per share, purely on the back of selloffs.
We expect buying sentiments to continue as investors and bargain hunters react to the better than expected corporate numbers released so far. As more Q3 earnings reports are expected in the face of sector rotation. Meanwhile, all eyes are on the fiscal and monetary authorities to give direction of the government reforms and policies so far.
However, pullbacks are creating ‘buy’ 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.
CRO|Investdata Consulting Ltd
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