Expect Material Shift, As NGX Pattern Breaks 2008 Resistance Level On Portfolio Realignments

Market Update for August 29

The bull dominance on the Nigerian Exchange continued back-to-back for three straight sessions on high traded volume to breakout the strong consolidative range and distribution phase of the market that ushered in a markup phase on increased buying interests and positive sentiments, hitting an all-time high of 66,490.34 basis points on the back of supportive market reforms by the new government that boosted confidence in the midst of the increasing macroeconomic headwinds, due to the ongoing economic and monetary policy reforms.
This is the highest level of Nigerian stock market since 1996 when official data began, due to policy statement of the president on its inaugural speech May 29, 2023, followed by the fuel subsidy removal, exchange rate unification and others that supported the market. Also, there was the effect of the additional shares listed in favour of companies like MTNN, and Fidelity Bank, as well as price appreciation among highly priced stocks on the exchange. There was also the recent buying interests in Consumer goods, banking, industrial and others.
The positive sentiment for BUA Foods and merger news among Dangote Sugar, Nascon and Dangote Rice continues to drive buying traffic to those companies, among others. These supported the NGX despite 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 result high volatility in the exchange market today.
The benchmark NGX All-Share index closed higher on improved traded volume and positive market breadth, as the buying interest in the broader market increased in the recent trading sessions. The candlestick formation at the end of the Tuesday’s trading signals continuation, or reversal after the index had broken the strongest resistance of 66,185.04 level to extend the uptrend for three days.
Despite the cautious trading in the absence of positive news, the earnings reports from Flour Mills and Honeywell came mixed, reflecting the impact of the FX policy on the nation today, even as Flour Mills paid full-year dividend of N2.25 each, pushing the price up. The audited half-year result of Stanbic IBTC released during trading was impressive, offering further insight into what we should expect from the first-tier banks. The company posted 58% and 122% growth in top and bottom lines respectively, declaring an interim dividend of N1.50 just like previous year.
This is the time to buy into valued 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.
The NGX index’s action is currently trading above the 66,000 basis points, ‘T line’ and 50-day moving average, attracting bargain hunters to position in fundamentally sound medium and low cap stocks amidst digesting of scorecards of many companies and prevailing macroeconomic factors including exchange rates, yield in money market and Q2 GDP. 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, as market wait for favorable news and statements from the minsters.
To navigate the rest of the quarter and year profitably using fundamental and technical analysis, join investdata’s 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 selloffs. Despite the mixed volume pattern witnessed in recent days, it is time to shop for undervalued stocks, sector rotation, go for defensive stocks at the next insider playing opportunity.
Oil price oscillation continued, as it rebounded to trade at $85.79 per barrel in the midst of hurricane Idalia hurtles and surprise crash in crude inventories supported higher. 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.
Meanwhile, Tuesday’s trading started in the upside and it was sustained, despite oscillating for the rest of the session on buying interests in blue chip companies, high cap stocks and others. This situation pushed the Index to an intraday high of 66,554.65 bps from its lows of 66,153.23bps, before closing above the opening points at 66,490.34bps.
Market technicals were positive and strong with a higher 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 84% buy position and 16% sell volume. The total transaction volume index stood at 0.93 points, just as the momentum behind the day’s performance was strong, with Money Flow Index reading 70.57pts, from the previous day’s 64.50pts, indicating that funds entered the market.
To successfully invest and trade in this volatile market for the rest of 2023, 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 Tuesday’s trading, the composite index NGXASI, gained 338.96bps, closing at 66,490.34bps, from its 66,151.38bps opening level, representing a 0.51% growth. Market capitalization rose by N339.96bn to N36.39tr, from the previous day’s N36.21tr, which also represented a 0.51% value gain.

Attention: If you have not signed up for INVESTDATA’s buy and sell signal setup, don’t delay, because the number of stocks entering their buying range has just increased to 40 as they build a new bullish base and positive chart patterns to be on our watchlist. These stocks have double the potentials to rally, considering their earnings prospects and the oscillating moves in a recovery market and economy.
To become a member, send ‘YES’ or ‘STOCKS’ to the phone numbers below. Take advantage of this service to buy right and sell right at the current recovery market in the midst of earnings season, portfolio reshuffling, and repositioning as we await an economic reform policy that can stimulate and re-track the economy to the path of growth and development.
Tuesday’s upturn was driven by demand for the shares of Flourmills, NB, BUA Foods, Dangote Sugar, Nascon, Transcorp, Wapco, Zenith Bank, Accesscorp, FBNH, GTCO and CHI Plc, among others. This impacted positively on Year-To-Date growth, which increase to 29.73%, while Market Capitalization YTD gain went up to N6.94tr, representing a 29.31% rise above its opening level for the year.

Mixed Sector Indices
Sectoral performance indexes were mixed, as the NGX Insurance and Energy closed lower by 1.56% and 0.09% respectively, while the NGX Banking led the advancers after gaining 1.63%, followed by Consumer goods and Industrial goods with 0.99% and 0.21% respectively.
Market breadth was positive as gainers outpaced losers in the ratio of 34:30, while activities in volume and value were up after investors exchanged 436.96m shares worth N7.01bn, driven by trades in FBNH, Japaul Gold, UBA, Accesscorp and Transcorp.
Flourmill and Champion Breweries were the best performing stocks, gaining 10% each, closing at N33.00 and N3.19per share each, on market forces and sentiment. On the flip side, CWG and Linkage Assurance lost 10% each closing at N4.05 and N0.90 per share, purely on the back of profit taking.

Market Outlook
We expect material shift in NGX’s pattern after breaking the 2008 resistance level of 66,371.20 on portfolio realignments in the midst of bargain hunting and mixed outlook for money market yields ahead of first tier banks earnings reports expectation and sector rotation persists.
However, pullbacks are creating buying opportunities amidst 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.

Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605