Market Update for September 12
The bulls resurfaced on the Nigerian Exchange on Thursday, even as the seesaw movement persisted with buying interests and selloff positions in the market, amid sector rotations and portfolio rebalancing. There are also factors such as the expected macroeconomic data, the policy meeting of the Central Bank of Nigeria, and end of the quarter window dressing by fund managers. The composite NGX All-Share Index closed higher on the back of increased bargain buying across some major sectors of the market that impacted positively on the index in the midst of low traded volume and positive market internals, wiping away previous session’s loss, thereby forming a top chart pattern that signal reversal or continuation trend depending of market forces as trading opened on Friday.
There is also buying sentiment in banking stocks with the market looking forward to the interim dividend income from Accesscorp, UBA and Fidelity Bank, now that others have given an insight into what should be expected. As the market extend its recovery phase, with players taking positions in the hope of the 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 fundamentals. The mixed sentiment and seeming rebound 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 rebound.
The NGX index’s action shows strength trading above the T-line, even when it is below the two moving averages of 50-EMA and 50-SMA that indicates somewhat weakness 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, due to the continued mismatch of policies by these economic managers and previous ones. 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 broke out a strong resistance level and psychological line of 97,000 in the face of buying sentiments and profit taking as revealed by the candlestick formation and momentum indicators. The ADX is looking down at 23.48, while RSI and Money Flow Index were up to read 50.71 and 78.22 points against the previous session 47.51 and 78.01 points respectively. Market players should watch this current trend and trade wisely in the face of funds entering the market on position taking in some sectors. Also, trading volume pattern continued to oscillates, suggesting buying interest and selloffs in some sectors in the midst of players digesting banking earnings and macroeconomic data.
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 on Thursday rebounded, to continue its oscillation, trading at $72.21 per barrel in the midst of tropical concerns of hurricane in US and OPEC delay plans to increase production. As Fed is set to cut rates in upcoming policy meeting. Even as 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, Thursday’s trading started in the green and it was sustained throughout the session, despite oscillating on profit taking and buying interest in blue chip companies and others, a situation that pushed the NGX’s index to an intra-day high of 97,108.30 basis points from its lows of 96,715.04bps, before closing above its opening level at 97,025.17bps.
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 buying sentiment as revealed by Investdata’s Sentiments Report showing 79% buy position and 21% sell volume. The total transaction volume index stood at 0.82 points, just as impetus behind the day’s performance was strong as Money Flow Index was up to read 78.22pts, from the previous day’s 78.03pts, indicating that funds entered the market.
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Index and Market Caps
At the end of Thursday, the composite NGX All-Share Index gained 310.13bps, closing at 97,025.17bps after opening at 96,715.04bps, representing a 0.32% growth. Market capitalization rose by N178.22bn, closing at N55.75tr from the previous day’s N55.58tr, representing a 0.32% appreciation in value.
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Thursday upturn was driven by buying interest and accumulation in the shares of Nestle, Flournill, Oando, FBNH, Accesscorp, Etranzact and CWG among others. This impacted positively on Year-To-Date gain that increased to 29.76%, while Market capitalization inched up to N11.07tr, representing 36.12% above its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, as NGX Energy and Insurance index close lower by 0.63% and 0.41% respectively, while the NGX Banking index led advancers after gaining 1.52%, followed by Consumer goods with 0.55%. Just as NGX Industrial goods finished flat.
Market breadth was positive as gainers outnumbered losers in the ratio of 27:22, while transactions in volume and value were down after investors exchanged 390.55m shares worth N7.97bn. Volume was driven by trades in Accesscorp, FBNH, UBA, Caverton and Zenith Bank.
FBNH and Caverton were the best performing stocks, gaining 10% each, closing at N26.40 and N2.31 per share respectively on the back of market forces and expectations respectively. On the flip side, Daar Communications and Eterna lost 8.86% and 8.14% respectively, closing at N0.72 and N32.15 per share, purely on profit taking.
Market Outlook
We expect mixed sentiment to continue on 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
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