Market Update for September 6
Tuesday’s trading on the Nigerian Exchange finished with the benchmark All-Share index closing sharply lower in the midst of increased selling momentum and positon taking ahead of corporate actions and expectation of half-year earnings from more banks. NGXASI extended its bear-run for the second consecutive sessions, as selloffs continued in major blue chip stocks, despite the seeming accumulation in some major sectors of the market, especially manufacturing companies. There is a historical case for the September effect, depending on the period analysis and what is happening. It is generally believed that retail investors liquidate their portfolios, going into the month to offset school fees for the children and other seasonal expectations, like the August inflation report, the outcome of the forthcoming Monetary Policy Committee meeting. Others include the fear of global economic recession and pre-election year tension, ahead of Q3 earnings reporting season in October. Also, the market continues its oscillation of making lower lows and lower highs to create buy opportunities for discerning investors as revealed by price action, volume and momentum.
The double top reversal pattern formed earlier was confirmed at the end of Tuesday’s trading, as NGX index action pulled back on a low traded volume amidst negative market breadth and selling sentiment as index breakdown the T line to signal sell ahead of the above mentioned events in the month. My answer regarding what to do under the current phase or market mood, whether regarding an individual stocks or an index, especially when to buy or sell, is always based on price actions and the money flow direction. We only want to hold stocks that are increasing, or at least retaining their value, while avoiding equities that are on the decline, and the toolset to evaluate price action is technical analysis.
The contemporary technical analysis that works in the changing volatile market, is what you should adopt. That is why it’s never been more important to join me at the upcoming Q4 Master Class in October, the largest quarterly traders summit in Nigeria. I will be sharing new actionable strategies and real trading education that will arm you with the tools that will help you meet your financial goals for the rest of the year 2022 and beyond.
Despite, the pullback witnessed on Tuesday, volume pattern and price structure in recent days and weeks reveal accumulation in some sectors and individual stocks, as selloffs had persisted in some other stocks and sectors as money flow index has also suggests that funds are leaving the market despite the corporate actions and expected earnings report. The prevailing market condition is creating ‘buy’ opportunities for players that understand stock market dynamics, especially as these companies’ earnings performance beat market expectations to indicate their inherent value and the cheap state of these stocks.
To navigate this month 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 range market. Despite the mixed sentiment witnessed, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.”
Oil prices extended its pullbacks to trade at $91.36 despite OPEC cutting output in the face of G7 capping Russia oil as energy crisis continue in Eurozone in the midst of recession fear as a result of aggressive interest rate actions by central banks across the globe droving bearish sentiment. Despite the bailout package of china’s government to simulate economic activates and stable employment and that of Germany package to manage energy crisis.
Tuesday’s trading opened slightly on the downside, and was sustained throughout the session despite oscillating in the afternoon on selloffs in blue-chips stocks like Airtel, GTCO and others, a situation that pushed the NGX’s index to an intraday low of 49,639.64bps from its highs of 49,994.14ps, before closing below its opening point at 49,644.921bps.
Market technicals were negative and mixed, with lower volume of shares traded than the previous day in the midst of breadth favoring the bears on a selling pressure as revealed by Investdata’s Sentiments Report showing 99% sell volume and 1% buy position. The total transaction volume index stood at 0.74points, just as impetus behind the day’s performance was relatively strong as Money Flow Index is looking down at 53.63pts, from the previous day’s 58.59pts, indicating that funds left the market.
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Index and Market Caps
At the end of the day’s trading, the composite NGX All Share index shed 346.49bps, closing at 49,644.92bps, after opening at 49,991.41bps, representing a 0.69% decline, just as market capitalization fell by N186.89bn, closing at N26.78tr, from the previous day’s N26.97tr, which also represented a 0.69% depreciation in value.
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Meanwhile, Tuesday’s downturn was driven by profit taking and selloffs in Airtel, GTCO, Stanbc IBTC, Zenith Bank, NB, NGXGroup, Accesscorp, FBNH, Nahco, Transcorp and NPF Microfinance among others, which impacted mildly on Year-To-Date gain, which reduced to 16.22%. Market capitalization gain YTD also rose to N3.23tr YTD, representing a 20.10% rise over the opening level for the year.
Mixed Sector Indices
The sectorial performance indexes were mixed, as the NGX Industrial and Consumer Goods closed higher by 0.16% and 0.04% respectively, while NGX Banking index led the decliners after losing 1.31%, followed by Insurance with 0.06%. Just as Energy closed flat.
Market breadth remained negative, as losers outnumbered gainers in the ratio of 18:11; just as transaction volume and value were mixed, after stockbrokers crossed 138.99m shares worth N2.73bn, with volume driven by trades in Sterling Bank, Transcorp, Zenith Bank, GTCO and UBA.
Unilever and Chemical Allied Product were the best-performing stocks, after gaining 9.43% and 7.58% respectively, closing at N13.35 and N17.75per share respectively on market forces and earnings expectation. On the flip side, NPF Microfinance and Regency Insurance lost 7.83% and 7.69% respectively, closing at N1.53 and N0.24 per share, purely on selloffs.
Market Outlook
We expect cautious trading and mixed trend on interim dividend expectation and portfolio rebalancing on bargain hunting as players interpret macroeconomic data and impressive half-year results. As players look forward to UBA and Accesscorp numbers in the midst of sovereign risks, as all eyes are on interim dividends.
We note also the flow of funds into the fixed income segment on the rate hike by the CBN, as sector rotation persists. Analysts are also focused on the lookout for August CPI and flow of funds amid oil prices oscillation.
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Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08179547605
