Market Update for September 23
The last full trading week of the month started on a positive note on the Nigerian Exchange amid the ongoing policy meeting of the Central Bank of Nigeria (CBN) and reactions to the latest half-year earnings report from Accesscorp which was impressive with top and bottom lines rising by three digits. The directors also offered a conservative 45 kobo interim dividend that came below market expectation.
The buying interest in banking and consumer goods stocks during the session impacted the composite NGX All-Share Index positively, as it closed higher on a low traded volume and positive market internals. This extended the previous session’s bull-run on the back of an increased bargain hunting across some major sectors of the market ahead of the MPC meeting outcome. There is also the usual quarter-end window dressing by Fund Managers, and breakout of a double top chart pattern that signals reversal or continuation of trend, depending on market forces as portfolio repositioning persist.
The mixed sentiment continued in the face of recovery phase, as players are positioning for quarter end window dressing and Q3 earnings reporting season in October. The current state of the NGX presents an opportunity to buy into undervalued and fairly value companies as revealed by their half-year corporate numbers and price to earnings ratios. This recovery and markup phase are different dynamics of the market that require effective strategies to navigate and follow the trend. It is expected that smart money will take advantage of low valuation in the market to buy into value and defensive stocks to support this rally as all eyes are on the outcome of policy meeting next week.
Give that strength has returned to the market, the NGX index’s action is trading above the T-line and the two moving averages of 50-EMA and 50-SMA that indicates a bullish momentum in the midst of changing market fundamentals and technicals. We note that the economic reforms of the government, measured by the outpouring of fiscal and monetary policies are yet to put the nation’s economy on the path of progress. There are also issues with the implementation style amid the oscillating oil production output even as the Naira continues to depreciate at a time that oil is trading below $75 per barrel at the international market.
Technically, the NGX is on an uptrend, as it breaks out strong resistance level of 98,242.60 in the face of mixed sentiments and profit taking as revealed by the candlestick formation and momentum indicators. As ADX inched down at 21.10, while RSI and Money Flow Index were mixed to read 63.17 and 67.52 points against the previous session 61.94 and 67.92 points respectively. Market players should watch this current trend and trade wisely in the face of funds leaving the market on selloffs in some sectors and position taking in others. Also, trading volume pattern continued to oscillates, suggesting buying interest and selloffs in some sectors in the midst of players digesting banking earnings and expecting outcome of ongoing CBN policy meeting.
To navigate the rest of this quarter and beyond profitably using fundamental and technical analysis to run, join investdata live sessions at noon every Monday, Wednesday and Friday 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 oscillating volume of transaction witnessed in recent time, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.
Oil prices moved up on Monday, to continue its oscillation, as it trades at $74.84 per barrel in the midst of tropical storm and hurricane threaten supply. As rate cuts by Fed is likely to boost demand, even as OPEC delay plans to increase production. Just as the rising geopolitical uncertainties across many economies is a threat to the global economy. This trend may likely continue for the rest of 2024, while the up and down movement continues to drive volatility, even as the raging war between Ukraine and Russia continues to influence global oil supply and demand.
Meanwhile, Monday’s trading opened in the upside and was sustained throughout the session, despite oscillating on buying interest in blue chip companies and profit taking others, a situation that pushed the NGX’s index to an intra-day high of 98,522.39 basis points from its lows of 98,301.25bps, before closing above its opening level at 98,386.60bps.
Market technicals for the session were positive and mixed with lower volume when compared to the previous session in the midst of breadth favoring the bulls on a mixed sentiment as revealed by Investdata’s Sentiments Report showing 39% buy position and 61% sell volume. The total transaction volume index stood at 0.86 points, just as energy behind the day’s performance was strong as Money Flow Index was down to read 67.52pts, from the previous day’s 67.94pts, indicating that funds left the market, despite closing in the green.
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Index and Market Caps
At the end of Monday’s session, the NGX All-Share Index gained 138.61bps, closing at 98,386.60bps after opening at 98,247.99bps, representing a 0.14% up. Market capitalization rose by N79.65bn, closing at N56.54tr from the previous day’s N56.48tr, representing a 0.14% value gain.
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The upturn was driven by buying interests and accumulation in the shares of Flour Mills, Fidelity Bank, PZ Cussons, FBN Holdings, UBA, NB, Transcorp, CWG and Omatek among others, which impacted positively on Year-To-Date gain as it increased to 31.58%, while Market capitalization inched up to N11.76tr, representing 38.21% above its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, with the NGX Banking and Consumer Goods index close higher by 0.95% and 0.24% respectively, while the NGX Insurance index led decliners after gaining 0.37%, followed by Energy and Industrial goods with 0.09% and 0.07% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 32:20, while transactions in volume and value were mixed after investors exchanged 810.43m shares worth N8.29bn. Volume was driven by trades in Transcorp, Fidelity Bank, Accesscorp, NPF Microfinance and Ellah Lakes.
McNichols and FCMB were the best performing stocks, gaining 10% each, closing at N1.87 and N8.80 per share respectively on the back of market forces and expectations respectively. On the flip side, Berger Paint and Daar Communication lost 9.8% and 9.3% respectively, closing at N21.10 and N0.68 per share, purely on profit taking.
Market Outlook
We expect mixed sentiment to continue as players reposition their portfolios in the midst of expected MPC meting outcome ahead quarter-end and Q3 earnings session in the midst of profit taking and bargain hunting in the hope of an inflow of the half-year numbers from the other interim dividend paying stocks, as sector rotation continues in the market. Portfolio repositioning is however continuing, with investors taking advantage of pullbacks to buy into value.
This is amid the volatility and pullbacks that add more strength to upside potential. Consequently, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.
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info@investdata.com.ng
ambrose.o@investdataonline.com
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08028164085
