Market Update for September 7
Trading on the Nigerian Exchange extended it negative outing at the midweek on a marginal decline in the face of mixed sentiments and position taking across the major sectors, as the composite All-Share index tries to resist decline in a bearish channel after making lower highs on a low traded volume and slightly positive breadth.
Price adjustments in the share prices of Stanbic IBTC and Zenith Bank were marked down for N1.50 and 30 kobo interim dividend respectively announced recently by their boards combined with selloffs and profit taking in medium and blue chip stocks to drag the NGXASI further down. This extended the bear transition for the third successive session, despite the seeming renew buying interest revealed by the mixed sentiment, especially in the consumer goods sector and others.
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 seeming bullish hammer candlestick formation, that signal reversal pattern, need to be confirm, as trading opens today, as NGX index action resisted further pullbacks on a low traded volume amidst flat market breadth and mixed sentiment as index trades below the T line, 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.
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 price extended its pullbacks to trade below $90 pre Ukraine war prices on the fear of weak demand as a result of impending recession and tight supply worries that may keep the price oscillating below $100, despite OPEC cutting output in the face of G7 capping Russia oil as energy crisis continue in Eurozone in the midst 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.
Meanwhile, midweek’s trading started slightly on the downside and oscillated for the rest of the session on position taking and selloffs in blue-chips stocks, a situation that pushed the NGX’s index to an intraday low of 49,616.03bps from its highs of 49,654.72ps, before closing marginally below its opening point at 49,599.73bps.
Market technicals were mixed and weak, with lower volume of shares traded than the previous day in the midst of breadth favoring the bulls on a mixed sentiment as revealed by Investdata’s Sentiments Report showing 51% buy volume and 49% sell position. The total transaction volume index stood at 0.69points, just as energy behind the day’s performance was relatively strong as Money Flow Index is looking flat at 53.99pts, from the previous day’s 53.63pts, indicating that funds entered the market.
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Index and Market Caps
The benchmark NGX All Share index, at the close of Wednesday’s trading shed 9.16bps, closing at 49,599.73bps, after opening at 49,644.92bps, representing a 0.09% drop, just as market capitalization fell by N24.38bn, closing at N26.75tr, from the previous day’s N26.78tr, which also represented a 0.09% value loss.
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Midweek downturn was driven by position taking and selloffs in FCMB, Oando, GSK, Sterling Bank, Nahco, NGXGroup, UPDC, Fidelity Bank, Ucap, FTNcocoa and Cornerstone Insurance among others, which impacted mildly on Year-To-Date gain, which reduced to 16.11%. Market capitalization gain YTD also rose to N3.20tr YTD, representing a 19.99% rise over the opening level for the year.
Bearish Sector Indices
The sectorial performance indexes were down, as the NGX Consumer Goods closed 0.10% in the green, while the NGX Oil/Gas index led the decliners after losing 0.32%, followed by Banking and Insurance with 0.30% and 0.03% respectively. Just as Industrial goods closed flat.
Market breadth was slightly positive, as gainers outnumbered losers in the ratio of 16:15; just as activities in volume and value were down, after players exchanged 128.94m shares worth N1.67bn, with volume driven by trades in Sterling Bank, Zenith Bank, GTCO, ETI and Fidelity Bank.
PZ and NPF Microfinance were the best-performing stocks, after gaining 9.76% and 4.58% respectively, closing at N9.00 and N1.60per share respectively on earnings expectation and market forces. On the flip side, Chams and FCMB lost 10% and 8.02% respectively, closing at N0.27 and N3.21 per share, purely on profit taking.
We expect a mixed trend in the midst of cautious trading and earnings expectation, as portfolio rebalancing on bargain hunting. Just 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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