Demand Pushes NGSE Index Up, As Investors React To Latest CBN Rates Crash

Market Update for September 23

Equity prices at midweek closed higher on the Nigerian Stock Exchange (NSE) with the key performance index sustaining its uptrend on increased gaining momentum for the fourth successive trading day. There was positive sentiment for the expected inflows of funds from other investment windows due to Tuesday’s further crash in rates by the Central Bank of Nigeria (CBN), deepening the negative returns in fixed income investment windows. There is also the factor of the expected Q3 earnings season that is around the corner that helped to boost investor sentiments.

This is another signal for markup that supports bullish transition and recovery, which is another indication that smart money is at work.

However, we need to confirm at the next trading session to safely conclude, that the bull rally is here again.

Meanwhile, midweek’s trading started marginally up, but pulled back slightly at midday and oscillated throughout the session on improved buying interests that influenced the prices of MTNN, Seplat, FBN Holdings, UBA, NB, Lafarge Africa, and Dangote Sugar. This pushed the benchmark NSE index to an intraday high of 25,785,418 basis points, from its low of 26,531.3bps, and thereafter closed at 25,654.90bps on positive breadth

Wednesday’s market technicals were positive and strong, with higher volume traded than the previous session in the midst of positive breadth and sentiment, as revealed by Investdata’s Sentiment Report showing 98% ‘buy’ volume. Total transaction volume index stood at 1.71 points, just as the impetus behind the day’s performance remained relatively strong, with Money Flow Index reading 66.94 points, from the previous day’s 65.14 points, an indication that funds entered the market.

Index and Market Caps

The All-Share index gained 128.12bps to close at 25,783.55bps, after opening at 25,653.59bps, representing 0.50% growth, just as market capitalization rose by N67bn to N13.48tr, after opening at N13.34bn, also representing 0.50% value appreciation.

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The demand for low and highcap stocks during the session impacted positively on the index, reducing Year-To-Date loss to 3.95%, while market capitalization YTD gain firmed up at N518.23bn, representing 3.88% above the year’s opening value.

Bullish Sector Indices

The sectorial performance indexes were bullish during the session with the NSE Oil/Gas gaining 2.02% to lead the advancers, followed by Consumer Goods, Insurance, Banking and Industrial Goods that inched 1.35%, 1.09%, 0.69% and 0.09% up respectively.

Market breadth turned positive, with advancers outnumbering decliners in the ratio of 21:14, while transactions in volume and value terms rose by 58.05% and 4279% respectively. Volume was driven by trades in Sterling Bank, FBNH, Transcorp, FCMB and Guaranty Trust Bank.

Prestige Assurance and International Brewery were the best performing stocks, gaining 9.09% and 9.09% respectively, closing at N0.60 and N0.34 per share on their low price attraction and market forces. On the flip side, ABC and Royal Assurance and Cornerstone Insurance lost 6.54% and 6.25% respectively, closing at N5.00 and N0.60 respectively on profit taking.

Market Outlook

We expect the current trend and repositioning to continue ahead of third quarter-end window dressing and corporate earnings season, despite the negative macroeconomic indices, given the further crash in money market rates, while inflation is at 13.22%, worsening the negative returns on many investment windows.

The mixed intraday movement is likely to persist as the month of September progresses in the midst of profit booking, as well as the mismatch of economic policies and negative macroeconomic indices. This is also against the backdrop of the fact that the capital wave in the financial market may persist in the midst of relatively low-interest rates in the money market, high inflation, negative Q2 GDP of 6.1% and unstable economic outlook for the rest of 2020 as government and its economic managers are going front and back with mismatch polices and implementation.

Also, investors and traders are positioning amidst the changing sentiments in the hope of improved liquidity and positive economic indices which may reverse the current trend.

We see investors focusing on portfolio adjustment and rebalancing by targeting companies with strong potentials to grow their Q3 earnings and dividend on the strength of their earnings capacity as the year last quarter is at the corner.

Again, the current undervalue state of the market offers investors opportunities to position for the short, medium and long-term, which is why investors should target fundamentally sound, and dividend-paying stocks for possible capital appreciation for the rest of the year.

Meanwhile, the home study packs on Strategies and How to invest profitably in this Changing Market Dynamics/ Recession, Mastering Earnings Season For Profitable Investing and Trading in any market situation/ cycles are available. To obtain your pack send ‘Yes’ or ‘Stock’ to 08028164085, 08032055467, 08111811223 now.

INVESTDATA INVESTORS SUMMIT 2020: BEYOND THE UNCERTAIN TIMES

Theme- Life Beyond COVID: Investment Opportunities in Various Assets Classes

Sub-Topics

  1. Life Beyond the Pandemic: Personal Financial Planning, Investment and Trading Strategies in a Low Yield Environment (AlhajiGarbaKurfi, MD/CEO, APT Securities & Funds Ltd)
  2. How to Buy and Sell Stocks Profitably in Recession, Recovery and Boom (Mr. Abdul-Rasheed Momoh, Head, Capital Market TRW Stockbrokers Ltd)
  3.  Economic Recovery Scenarios, What’s the Fate of Equities and Other Assets Classes (Mr. OluwasegunAkinwale, Lead Analyst, Nova Merchant Bank)
  4. The Paradox of Declining Interest Rate and Rising Inflation: Confusion or New Realities for Investors (Mr. AbiolaRasaq, CSCS)
  5. The New Thinking in Fixed Income Market: Today and Tomorrow (Mr. KayodeTinuoye, Portfolio Manager, United Capital Asset Management)
  6.  Outlook for Alternative Asset Classes: Where are the ETFs, Commodities, REITS and Real Estate Opportunities (Mr. Taiwo Yusuf Head, Wealth Management, Meristem)
  7. Portfolio Restructuring and Rebalancing for Positive Returns Ahead of Market Rebound (Engr. EkwuemeMike  MD, X-Front Traders Ltd
  8. The Power of Earnings Quality, Value and Dividends in Equity Investment (Mr. Ambrose Omordion CRO Investdata Consulting Ltd)

The Summit will provide answers to these Seven question among others

  • Where exactly are the opportunities in the equity market, fixed income and others?
  • Which sectors or markets provide the post COVID-19 investment opportunities?
  • How investors and traders can take advantage of the low interest regime to build profitable portfolios
  • What are the prevailing market moves and who are the dominant players?
  • What are Smart Money and Retail investors doing?
  •  Where should investors look to enter the market or exit?
  • Is it the same every day, season and year?

Date: September 26, 2020

VENUE: ZOOM

For more details, call 08028164085, 08032055467, 08111811223 now.

Ambrose Omordion

CRO|Investdata Consulting Ltd

info@investdataonline.com

info@investdata.com.ng

ambrose.o@investdataonline.com

ambroseconsultants@yahoo.com

Tel: 08028164085, 08032055467

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