Expect Improved Sentiment, On Slip In Money Market Rates, PEPT Ruling

Market Update for September 6

It was a quiet, but flat session on the Nigerian Exchange at the midweek in the midst of two major events: the Presidential Election Tribunal ruling and the TB primary market auction which outcomes are likely to impact the market positively as the tribunal unanimously dismissed the petitions of three political parties and their presidential candidates for lack of merits. The judges therefore confirmed President Bola Ahmed Tinubu as the duly elected president.
Also the rates and yields in the TB auction slipped lower to 4.5%, 7% and 12.55% respectively for the 91, 182 and 364-day in the face of oversubscription to keep money market rates outlook mixed as discussed earlier in our updates.
The NGX All-Share index closed slightly lower on a low traded volume and positive market breadth, amidst profit taking in in blue chip companies like Dangote Sugar, GTCO, International Breweries, NB, UBA, PZ and others that pushed the market down on cautious trading. The bullish momentum is still very much intact, despite the slowdown or pullback witnessed at the end of midweek trading to halt four consecutive sessions of bull-run. This is also as investors await the audited half-year scorecards of the remaining first-tier banks, amidst material shift of the index and ongoing volatility.
Also, despite the increasing demand for consumer and industrial goods in the market, players should trade with caution while positioning, but target companies in the services industry with strong fundamentals and earnings power capable of supporting price and higher dividend payment at the end of the year. These are against the backdrop of the changing market conditions and trading environment due to macroeconomic headwinds, mixed corporate earnings and the prevailing yield in alternative market with rates and yields outlook remaining mixed due to rising inflation, high interest rate and exchange rate problem as a result of the high volatility in the exchange.
The NGX All-Share index still traded above the 68,000 basis points mark, heading towards the 1984 threshold of 70,000bps on a less than average transaction volume and buying sentiment. The candlestick formation at the end of the session signaled a top reversal pattern as the 2008 resistance level turn support to reveal a markup phase. Also, the market continues to interpret and digest the news of Oando’s acquisition of the entire shareholding of Agip’s assets and the planned delisting of PZ Cussons announced on the Exchange ahead of its expected full-year audited financials originally scheduled for publication on May 30, 2023.
However, this is the time to buy into value stocks with strong fundamentals, as the market looks forward to a favourable news that will support this buying interest that resurfaced. Also noteworthy is the mixed outlook in the fixed income market yields and rates, amidst portfolio repositioning and sector rotation on the strength of company earnings’ power. It is therefore time to use technical tools, if you have been ignoring charts and fighting the trends, it is your chance to step up your game. It is pertinent to stress the fact that profit taking is part of market dynamics, which can occur at any time, as we look forward to a mixed outing and intermittent profit taking, since policy factors that pushed the market up are shaking, with investors awaiting favorable news and statements from the minsters on their respectively sectors.
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Oil price oscillation continued, trading at $90.34 per barrel in the midst of production cut by Saudi Arabia and weak global demand as Chinses weak economic dampen sentiments. The Russia-Ukraine war remains a major concern, the prevailing high interest rate regime and slowing inflation. Also, supply tightened due to the Russia-Ukraine conflict that entered the second year. This up and down movement in oil price, has continued to drive volatility across markets.
Midweek’s trading opened slightly in the red and it was sustained, despite oscillating throughout the session on profit taking and positioning across the sectors. This situation pushed the Index to an intraday low of 67,624.46bps from its highs of 68,347.52bps, before closing marginally below the opening figure at 68,286.28bps.
Market technicals were positive and mixed with a lower volume traded when compared to the previous session in the midst of breadth favoring the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 92% buy position and 8% sell volume. The total transaction volume index stood at 0.88 points, just as the momentum behind the day’s performance was strong, with Money Flow Index reading 79.22pts, from the previous day’s 80.16pts, indicating that funds left the market.
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Index and Market Caps
The benchmark NGX All-Shsre Index, at the end of midweek’s trading dropped by 48.40bps, closing at 68,286.28bps, from its 68,334.68bps opening level, representing a 0.07% drop. Market capitalization also fell by N26.48bn to N37.37tr, from the previous day’s N37.40tr, which also represented a 0.07% value loss.
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Meanwhile, the session downturn was driven by profit booking in the shares of Dangote Sugar, NB, GTCO, UBA, International Breweries, Vitafoam, PZ and Nascon, among others. This impacted mildly on Year-To-Date gain which reduced to 33.34%, while Market Capitalization YTD gain stood at N8.40tr, representing a 34.80% rise above its opening level for the year.

Bullish Sector Indices
Sectoral performance indexes were in green, save for NGX Consumer Goods that closed lower by 0.82%, while the NGX Insurance led the advancers after gaining 0.43%, followed by Banking and Industrial goods with 0.27% and 0.17% respectively. The NGX Energy closed flat.
Market breadth turned positive as gainers outnumbered losers in the ratio of 31:20, while transactions in volume and value were down after investors exchanged 378.65m shares worth N5.48bn, driven by trades in Oando, UBA, Transcorp, Accesscorp and Omatek.
Guinea Insurance and Beta Glass were the best performing stocks, gaining 10% and 9.91% respectively, closing at N0.33 and N47.15per share each, on market forces. On the flip side, Vitafoam and Veritas Kapital lost 10% and 7.69% respectively, closing at N22.50 and N0.24 per share, purely on the back of profit taking and selloffs.

Market Outlook
We expect improved sentiment and momentum as players reacts to slide in money market rates and outcome tribunal ahead of the expected half-year earnings reports of UBA, Accesscorp and Zenith Bank in the midst of bargain hunting and mixed outlook for money market yields ahead of midweek TB primary market auction and sector rotation persists.
However, pullbacks are creating buying 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.

Theme Thriving In A Changing Macroeconomic Climate: Identifying Opportunities, Waves & Paths On NGX
Navigating Market Dynamics: Insights For Profitable Strategies- Alhaji Garba Kurfi, MD/CEO APT Securities & Funds Ltd)
Mastering Market Volatility: Chart & Analysis For Higher Returns- Mr Abdul-Rasheed Oshoma Momoh, Head Capital Market at, TRW Stockbrokers Ltd
The Power of Macroeconomic Data In Equities’ Trading & Investing- Mr Olatunde Amolegbe, MD/CEO, Arthur Steven Asset Management Ltd
Understanding The Link Between Fundamental, Technical and Sentiment Analyses In Picking Stocks- Mr Ambrose Omordion, CRO, Investdata Consulting Ltd.
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Tel: 08028164085, 08179547605