Market Update for September 15
The bear run on the Nigerian Exchange continued Thursday as the key performance NGX All-Share index ranged, closing lower, thereby extending the negative sentiment for two successive sessions. Many investors continue to sit on the fence as revealed by the less-than-average traded volume in the face of a negative market breadth and low liquidity.
Also on Thursday, the National Bureau of Statistics (NBS) released Nigeria’s August inflation report that confirmed the nation’s entry into stagflation, after crossing 20% to 20.52%, the highest in 17 years, compared to 19.64% in the month of July, thereby throwing the real rate of returns in fixed income instrument further into red. This has left many pension and fund managers worried, forcing them to reposition their portfolio by seeking to hedge in sectors and individual stocks.
On the hotter than expected consumer price index for August, the selling sentiments across major sectors dragged the market down, especially with selloffs witnessed in consumer goods and energy stocks ahead of Monetary Policy Committee meeting, even as the financial markets have generally remained calm in recent days. At the Treasury Bills Auction, we noticed a marginal decline in long tenored instruments to 9.75%, from the previous rate of 10%, while the others tenors were mixed.
The continued low liquidity in the equity space is due to the increase in fixed income yields. But in hedging against inflation that is above 20%, some sectors and individual equities remain the best bet for capital preservation and growth in this changing environment. Just go defensive in those sectors and individual stocks with higher earnings powers and positive technicals position.
With the ranging market, the internals are revealing the hidden forces that work for both short and long-term traders to get into the best position and allow you to stay in them for maximum profit. The market’s internals measure the forces behind the advancers and associated volume of the uptick or downtick. These two ratios tell you everything you need to know to predict future price movement. So, the volume pattern and index structure in recent days show position taking, while funds enter some stocks as revealed by the volume traded and money flow index which need to be confirmed, especially as mixed sentiment recorded on Tuesday signals a change in trend, 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 which combines price and volume. 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 prices dip further to trade at $91.38 as crude prices are set for the third consecutive week of losses on increasing fear of recession as latest CPI reports support rate hike from central banks of the world in the face of China battling with Covid 19 lockdown. The continued oscillation in oil price, has also continues to drive volatility in the face of rising interest rates and inflation. Despite the bailout package of the Chinese government to simulate economic activates and stable employment, as well as that of Germany aimed at managing the energy crisis.
Thursday’s trading opened slightly in the red and oscillated throughout the session on selloffs in some blue-chips stocks, a situation that pushed the NGX’s index to an intraday low of 49,534.65bps from its highs of 49,579.34ps, before closing below its opening figure at 49,540.48bps.
Market technicals were negative and weak, with lower volume of shares traded than the previous day in the midst of breadth favoring the bears on a selling sentiment as revealed by Investdata’s Sentiments Report showing 87% sell position and 13% buy volume. The total transaction volume index stood at 0.89points, just as momentum behind the day’s performance was relatively weak as Money Flow Index is looking down at 49.54pts, from the previous day’s 56.04pts, indicating that funds left the market.
For you to successfully invest and trade in this volatile market, order for Investdata’s video on Buy & Sell Technical Analysis Toolbox to navigate the volatile market profitably, enhance trading decisions and boost your bottom line. Also, to up your game in stock trading and investing, understanding the key to trading price and index action will go a long way to make the difference in your trading results, check out the video materials below.
Index and Market Caps
At the end of Thursday’s trading, the composite NGXASI shed 35.45bps, closing at 49,540.48bps, after opening at 49,575.93bps, representing a 0.07% drop, just as market capitalization fell by N19bn, closing at N26.72tr, from the previous day’s N26.74tr, which also represented a 0.07% value loss.
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Meanwhile, Thursday downturn was driven by selloffs in Vitafoam, UACN, UPDC, Accesscorp, Oando, GTCO, International Breweries, Dangote Sugar, FBNH and United Capital among others, which impacted mildly on Year-To-Date gain, which reduced to 15.98%. Market capitalization gain YTD also rose to N3.18tr YTD, representing a 19.86% rise over the opening level for the year.
Bearish Sector Indices
All the sectorial indexes were down, except for the NGX Industrial Goods that closed flat, while the NGX Consumer goods index led the decliners after shedding 1.61%, followed by Energy, Banking and Insurance with 0.86%, 0.34% and 0.31% respectively.
Market breadth remained negative, as losers outnumbered gainers in the ratio of 17:8; just as activities in volume and value were down, as stockbrokers transacted 167.61m shares worth N1.26bn, with volume driven by trades in Courtville Business Solution, Accesscorp, Fidelity Bank, Transcorp and Consolidated Hallmark Insurance.
Sovereign Trust Insurance and Cadbury were the best-performing stocks, gaining 3.85% and 2.69% respectively, closing at N0.27and N13. 35per share respectively on market forces. On the flip side, UACN and Vitafoam lost 6.82% and 5.88% respectively, closing at N11.00 and N21.25 per share, purely on selloffs and profit taking.
We expect mixed trend on digesting of inflation report and cautious trading, amidst reactions to Accesscorp’s mixed results with lower interim dividend payout of 20 kobo and next MPC meeting, while portfolio rebalancing continues on bargain hunting in the midst of the worsening sovereign risks.
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.
INVESTDATA Q4 MASTER CLASS
Theme New Actionable & Technical Strategies For Profitable Trades In Changing Market Environment.
- Equity Investing in changing volatile Market: Two Sides Of The Coin, Mr Rotimi Olubi. MD ARM Securities Ltd
- Arbitrage Trading & Other New Strategies To Hedge Against Stagflation, Mr Abiola Rasaq , CSCS
- Mastering Contemporary Technical Tools For Wealth Building In Uncertain Environment, Mr Abdul-Rasheed Momoh, Head Capital Market, Trw Stockbrokers Ltd
- Time & Price Analysis For Money Making In Uncertain Market, Mr Ambrose Omordion, CRO. Investdata Consulting Ltd.
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Nigeria has entered one of the greatest inflationary periods in the last six months, which is threatening investment and economic activities. And government policies through their economic managers had pushed millions of Nigerians down …. Out of the middle class…out of private retirement, healthcare and decent lives, based on independence and privacy… into a collective nightmare we call financial lockdown.
This is what happens when people are trapped by their own collapsing currency, such that they become deeply indebted. Inflation causes huge distortions in the economy and in the markets, so its critical that you take the necessary steps to ensure you are not left behind.
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- How all fixed income market instruments had failed investors in stagflation environment
- How arbitrage trading is creating income for discerning market players
- How to hedge against inflation and preserve capital in sectors and industry that have the potential to drive profit that will support equity prices
- How classical technical analysis had failed many traders in this high volatile market
- How to filter market noise and identify the most opportune time to join any trade
- Tradeable chart patterns and candlestick formations that signal real money-making opportunities
- Five hot stocks that beat inflation and deliver over 30% in a short period of time.
- How to buy right on the two sides of equity investing, fundamental vs technical, risk vs profit, buy vs sell and bears vs bulls,
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Time: 9AM Prompt
Fee: N50,000 per participant
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CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605