Mixed Sentiment, As Investors Bet On Q3 Earnings, Policy Initiatives Of New Central Bank Governor

Market Update for September 28

The bearish mood on the Nigerian Exchange persisted Thursday after the short holiday, as selloffs and profit booking continued to defy the quarter-end window dressing on a declining traded volume, reflecting the mixed sentiment, as well as the wait-and-see attitude of investors ahead of the Q3 earnings reporting season. The market is also awaiting any hint of a clear direction for the nation’s monetary policy from the new Central Bank of Nigeria (CBN) management.
Selloffs witnessed so far in the blue chip companies impacted negatively on the key performance NGX All-Share index, as it close lower for the sixth successive session on a low traded volume and negative market breadth. This is happening in the midst of the NT-Bills primary market auction recording rate declining at the end of day to 4.99%, 6.55% and 11.37% from the previous yield position of 6.50%, 7% and 12.98% respectively for 91, 182 and 364-day tenor. This mixed outlook for money market rates is a plus for the stock market as it confirms the unclear direction of policy makers in that space. The index’s action had again formed a bullish hammer and double bottom within the consolidation range that signaled a reversal. However, this needs confirmation on Friday, being the last trading day of the month and quarter ahead of the final quarter in 2023.
Amidst concerns over macroeconomic headwinds in the country today, 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 pullbacks in the market have created bargain opportunities for discerning market players. As such, 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 slides to trade at $95.21 per barrel in the midst of stronger US dollar and more hawkish central banks moves, in the face of new rate and inflation waves that may affect crude 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.
Thursday’s trading opened slightly in the upside 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 66,399.02bps from its highs of 66,710.95bps, before closing below its opening figure at 66,448.63bps.
Market technicals were negative and mixed with a lower volume traded when compared to the previous session in the midst of breadth favoring the bears on a selling sentiment as revealed by Investdata’s Sentiments Report showing 16% buy position and 84% sell volume. The total transaction volume index stood at 0.53 points, just as the energy behind the day’s performance was weak, with Money Flow Index reading 43.13pts, from the previous day’s 47.05pts, indicating that funds left the market.
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Index and Market Caps
The benchmark NGXASI, at the close of Thursday’s trading, shed 203.54bps to close at 66,448.63bps, from its 66,652.17bps opening level, representing a 0.31% decline. Market capitalization also fell by N111.40bn to N36.37tr, from the previous day’s N36.48tr, which also represented a 0.31% depreciation in value.
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Meanwhile, the downturn was driven by selloffs and profit taking in Vitafoam, Oando, Dangote Sugar, GTCO, Accesscorp, UBA, Ucap and Transcorp Hotel, among others. This impacted negatively on Year-To-Date gain which reduced to 29.65%, while Market Capitalization YTD gain stood at N7.54tr, representing a 31.34% rise above its opening level for the year.

Bearish Sector Indices
Sectoral performance indexes were down, save NGX Insurance that closed 0.83% higher, while NGX Banking led the decliners after losing 1.01%, followed by, Consumer goods with 0.68%. Just as NGX Industrial goods and Energy closed flat.
Market breadth turned negative as losers outpaced gainers in the ratio of 26:16, while activities in volume and value were down after investors exchanged 273.80m shares worth N3.41bn, driven by trades in Accesscorp, Zenith Bank, Unity Bank, UBA and Transcorp.
RT Briscoe and CWG were the best performing stocks, gaining 9.76% and 9.72%, closing at N0.45 and N7.90 per share respectively, on market forces and sentiments. On the flip side, Vitafoam and FTN Cocoa lost 9.92% and 9.88% respectively, closing at N22.25 and N1.55per share, purely on the back of selloffs.

Market Outlook
We expect mixed sentiment on bargain hunting and portfolio repositioning ahead of Q4 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.

Theme Thriving 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
Fee: N50,000 per participant
Venue: ZOOM

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