Market Update for September 11
The seesaw movement on the Nigerian Exchange continued at midweek as the bears resurfaced amid selloffs and profit taking in blue chip companies a situation that weighed on the benchmark NGX All-Share index forcing it to close marginally lower. It therefore halted gains of the previous session in the face of buying interests in some major sectors of the market and the index action forming a double top chart pattern that signal reversal or continuation trend depending of market forces on Thursday. Volume was above average, just as market internals were positive .
With all eyes are on results of the remaining interim dividend paying banks, Guaranty Trust Holding Company Plc, on Thursday made available its half year audited earnings report to the market. The numbers were impressive, with the group posting top and bottom line growth of 107% and 223% respectively to at N1.39tr and N905.57bn. This translated to earnings per share of N32.12 each, as against N9.94 posted in same period 2023, following which the board offered a 100% increase in interim dividend payout at N1.00, compared to the 50 kobo paid in 2023. The market is therefore looking forward to those of Accesscorp, UBA and Fidelity Bank, now that the scorecards of Zenith Bank, Stanbic IBTC and most recently GTCO have given an insight into what should be expected from the remaining banks.
The distribution phase of the market reflected on the NGX index’s action, with players cashing out recent gains in repositioning of their portfolios in expectation of more earnings reports from the banks and August consumer price index ahead of CBN policy meeting and end of quarter window dressing by operators and fund managers. This pullback present opportunity to buy into undervalued and fair value companies as revealed by their half year corporate numbers and fundamentals. The mixed sentiment and pullback are different dynamics of the market that requires a 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 still show relative strength trading above the T-line, even when 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 is at resistance level in the face of mixed sentiments and profit taking as revealed by the candlestick formation and momentum indicators. The ADX is looking down at 25.86, while RSI and Money Flow Index were mixed to read 47.51 and 78.01 points against the previous session 47.91 and 71.64 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 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 at midweek inched up, to continue its oscillation as it trades at $70.61 per barrel in the midst of concerns about potential glut and hurricane fear in US. Even when OPEC plans to increase production in the face US mixed macroeconomic data pointing to rate cut by Fed. 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 opened in the upside before pulling back to oscillate for the rest of the session on profit taking and buying interest in other stocks, a situation that pushed the NGX’s index to an intra-day low of 96,702.26 basis points from its highs of 96,875.78bps, before closing slightly below its opening level at 96,715.04bps.
Market technicals for the session were positive and mixed with higher 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 68% buy position and 32% sell volume. The total transaction volume index stood at 0.96 points, just as momentum behind the day’s performance was strong as Money Flow Index was up to read 78.03pts, from the previous day’s 71.64pts, indicating that funds entered the market, despite sliding down to close in red.
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Index and Market Caps
The benchmark NGX All-Share Index shed 87.76bps, closing at 96,715.04bps after opening at 96,802.80bps, representing a 0.09% drop. Market capitalization fell by N50bn, closing at N55.58tr from the previous day’s N55.63tr, representing a 0.09% value loss.
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This downturn was driven by selloffs and profit taking in the shares of Julius Berger, Oando, Cornerstone,Transcorp and Linkage Assurance among others. This impacted mildly on Year-To-Date gain that slide to 29.34%, while Market capitalization slowed down to N10.84tr, representing 35.87% above its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes were in green, save for NGX Insurance index that closed in red by 1.44%, while the NGX Oil/Gas index led advancers after gaining 1.73%, followed by Banking, Consumer and Industrial goods with 0.64%, 0.27% and 0.01% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 31:25, while transactions in volume and value were mixed after investors exchanged 600.04m shares worth N8.81bn. Volume was driven by trades in Jaiz Bank, UBA, Accesscorp, Oando and RT Briscoe.
Caverton and Redstar Express were the best performing stocks, gaining 9.95% and 9.69% respectively, closing at N2.10 and N3.85 per share respectively on the back of market forces and expectations respectively. On the flip side, CWG and NNFM lost 10% and 9.94% respectively, closing at N5.40 and N43.50 per share, purely on profit taking.
Market Outlook
We expect mixed sentiment to continue on 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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