Market Update for September 21
The bearish mood on the Nigerian Exchange continued at the midweek despite the seeming mixed sentiment that revealed buying interests in some sectors and in dividend stocks, following which the benchmark NGX All-Share Index closed marginally lower, reversing previous session’s gain on a low traded volume and negative market breadth.
Position taking in some banking stocks supported the sectoral index and reduced the decline of the general market index, regardless of the recent volatility across NGX in the face of price markdown and profit taking ahead of MPC meeting holding next week after the interest rates hike by Feds again by a further 75 basis points at the expense of economic recession and continuation of its aggressive monetary policy tightening.
The market remains quiet ahead of next week’s meeting of the Central Bank of Nigeria (CBN) Monetary Policy Committee, because many players stay on the fence, waiting to confirm direction before jumping in, as outlook for the economy and the financial market remains unpredictable. However, there are sectors, industries and individual stocks that are still seeing positive activities from traders and investors. Those are stocks players should be paying attention to, as the decline in the NGX index action was halted after the fourth successive session, on improved traded volume in the midst of negative market breadth.
Despite, the seeming bear run, the market 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 sessions show position taking, while funds enter some stocks as revealed by money flow index which need to be confirmed, especially as positive sentiment supported the previous session candlestick formation and reversal pattern which was weak.
At the current declining phase, the decision about when to buy or sell individual stocks or an index, 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. Also, the last quarter of the year is around the corner, are you prepare to take advantage of seasonality to recover your losses and boost your gains?
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Oil price oscillation continued as it pulls back to $90.46 in the midst of weak demand and fear of recession around the globe in the face of supply tighten, as China battle with Covid 19 lockdown. The up and down movement 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.
Meanwhile, midweek’s trading opened on the down side and oscillated for the rest of the day on buying interests and selloffs in blue chip stocks, a situation that pushed the NGX’s index to an intraday low of 49,318.55bps from its highs of 49,455.99ps, before closing slightly below its opening figure at 49,421,91bps.
Market technicals were mixed and weak, with lower volume of shares traded than the previous day in the midst of breadth favouring bears on positive sentiment as revealed by Investdata’s Sentiments Report showing 75% buy position and 25% sell volume. The total transaction volume index stood at 0.30points, just as momentum behind the day’s performance was relatively weak as Money Flow Index is looking down at 35.27pts, from the previous day’s 42.41pts, indicating that funds left the market.
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Index and Market Caps
At the end of Wednesday’s trading, the composite NGX All-Share index slide by 23.40bps, closing at 49,421.91bps, after opening at 49,445.31bps, representing a 0.05% drop, just as market capitalization fell by N12.62bn, closing at N26.66tr, from the previous day’s N26.67tr, which also represented a 0.5% value loss.
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Midweek’s downturn was driven by selloffs in Lafarge. FBNH, NGXGroup, Sterling Bank, Accrsscorp, Oando, Cadbury, UCap, NEM, Academy Press and Jaiz Bank among others, which impacted mildly on Year-To-Date gain, as it reduces to 15.70%. Market capitalization gain YTD also rose to N2.93tr YTD, representing a 19.56% rise over the opening level for the year.
Bearish Sector Indices
All the sectorial performance indexes were down, except NGX Banking that closed 0.49% higher, while the NGX Insurance index led the decliners after losing 1.21%, followed by Energy, Industrial and Consumer Goods with 0.10%, 0.03% and 0.02% respectively.
Market breadth was negative, as losers outpaced gainers in the ratio of 12:10; just as transactions in volume and value were down, as players exchanged 51.88m shares worth N500.01m, with volume driven by trades in Zenith Bank, GTCO, Sterling Bank, Fidelity Bank and Transcorp.
Unity Bank and Multiverse were the best-performing stocks, gaining 10% and 9.82% respectively, closing at N0.44 and N3.13 per share respectively on market forces. On the flip side, Academy Press and NEM Insurance lost 9.78% and 6.08% respectively, closing at N1.66 and N5.25 per share, purely on profit taking.
We expect a mixed trend as reversal is underway on bargain hunting and cautious trading as investors digest the latest inflation data and recent results from the banking sector, especially those with interim dividend payout ahead of 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.
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- Mastering Contemporary Technical Tools For Wealth Building In Uncertain Environment, Mr Abdul-Rasheed Momoh, Head Capital Market, Trw Stockbrokers Ltd
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Tel: 08028164085, 08179547605