Mixed Sentiment, Ahead Of Q3 Window Dressing, As All Eyes On Nigeria’s Central Bank Gov., Deputies

Market Update for September 26

Trading activities on the Nigerian Exchange on Tuesday, extended its losing momentum, amidst a slowdown in selling sentiment as reflected in the volume traded, even as we noticed improvement in buying interests towards the end of the session.
The market’s weak performance was attributed to the continue selloffs and profit booking in highly capitalized stocks and blue chip companies that weighed on the benchmark NGX All-Share index to close lower on a low traded volume and flat market breadth, after the index action had a bullish hammer and double bottom within the consolidation range that signaled a reversal. However, this needs confirmation when the market opens Thursday in the midst of quarter-end window dressing that is underway due to portfolio rebalancing by fund managers ahead of the last quarter of 2023.
There was also the seemingly cautious trading ahead of Tuesday’s confirmation of the new central bank’s Governor and his four deputies by the senate, amidst worrying concerns over macroeconomic headwinds in the country. All eyes are still on the Q3 earnings reporting season that kicks off in October with early fliers, while expectations remain mixed, due to the ongoing fiscal reforms by government, as well as foreign exchange market challenges that have persisted with the Naira already crossing the N1,000/US Dollar threshold. Owing to the cautious environment pervading the nation’s equity market, it is important that you trade and invest wisely ahead of events and factors that will shape the market in the final quarter of this year. Despite the mixed sentiment witnessed so far, the market’s big uptrend remains intact to trade above the 50-Day moving average, despite testing it in the midst of material shift of the index and the ongoing volatility.
The five trading sessions of pullbacks have created bargain opportunities for discerning market players, so investors should trade consumer and industrial goods with caution while repositioning their portfolios, the targeting services industry stocks 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 mixed outlook for fixed income instruments yields and rates in the face of rising inflation, high interest rate and exchange rate challenges due to the high volatility in the exchange. However, candlestick formation at the end of the session signals a bearish pattern that supports downtrend, just as the 2008 resistance level turned another strong support level to watch.
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 pulled back to trade at $92.88 per barrel in the midst of production cuts by oil producers and booming US oil production, in the face of new rate waves and weak demand. 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 slightly in the green and oscillated for the rest of the session to pulled back profit taking and positioning in financial stocks and others, a situation that pushed the Index to an intraday low of 66,218.36bps from its highs of 66,937.30bps, before closing below its opening figure at 66,652.17bps.
Market technicals were mixed and somewhat with a lower volume traded when compared to the previous session in the midst of flat breadth and mixed sentiment as revealed by Investdata’s Sentiments Report showing 60% buy position and 40% sell volume. The total transaction volume index stood at 0.70 points, just as the energy behind the day’s performance was weak, with Money Flow Index reading 47.05pts, from the previous day’s 46.92pts, indicating that funds entered the market, despite closing lower.
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Index and Market Caps
At the end of Tuesday trading, the composite NGXASI lost 224.17bps, closing at 66,652.17bps, from its 66,882.64bps opening level, representing a 0.34% decline. Market capitalization also fell by N126bn to N36.48tr, from the previous day’s N36.61tr, which also represented a 0.34% value loss.
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Tuesday’s downturn was driven by profit taking and selloffs in BUA Cement, Conoil, Oando, Flour Mills, GTCO, Zenith Bank and Berger Paints, among others. This impacted negatively on Year-To-Date gain which reduced to 30.05%, while Market Capitalization YTD gain stood at N7.89tr, representing a 31.96% rise above its opening level for the year.

Mixed Sector Indices
Sectoral performance indexes were mixed, as the NGX Insurance and Consumer goods closed higher by 2.18% and 0.16% respectively, while NGX Banking led the decliners after losing 0.18%, followed by, Energy and Industrial goods with 1.24% and 0.36% respectively.
Market breadth was at par as losers equaled to gainers in the ratio of 22:22, while activities in volume and value were down after stockbrokers traded 363.99m shares worth N4.53bn, driven by trades in Accesscorp, Transcorp, UBA, Zenith Bank and FTN Cocoa.
Consolidated Hallmark Insurance and Cornerstone Insurance were the best performing stocks, gaining 10% each, closing at N1.10 and N1.65 per share respectively, on market forces and sentiments. On the flip side, Conoil and FTN Cocoa lost 9.99% and 9.95% respectively, closing at N80.20 and N1.72 per share, purely on the back of profit taking and selloffs.

Market Outlook
We expect mixed sentiment and reversal on bargain hunting and portfolio repositioning for quarter end window dressing in the face of sector rotation. As all eyes are on monetary policy drive of the New CBN Governor and his team.
However, pullbacks are creating ‘buy’ 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.

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

Are you interested in learning how to safely navigate the financial market in today’s trading and investing environment that is clouded with uncertainties and surprises that are driving the volatile markets across the globe? Despite these headwinds, discerning investors and smart traders on the NGX are cashing out high profits with practical strategies of effective combination of fundamentals, technicals and sentiments analysis of the professionals and experts in the market.
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Date: September 30. 2023
Time: 9AM Prompt
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Venue: ZOOM

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

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