Mixed Sentiment, Bargain Hunting, Yet On Nigerian Bourse, Amid Portfolio Repositioning For Q3 Earnings Inflow
Market Update for October 2
Trading activities on the Nigerian Exchange extended its six-month rally on Thursday, as the first trading session of October and the last quarter of the year opened on a positive note after the midweek holiday to celebrate the 65 years of the country’s Independence. The NGX’s composite index’s action extended its five trading sessions of back-to-back recovery to breakout the latest resistance level of 142,342.60 basis points on a very high traded volume to form a top pattern that signals the possibility of a pullback or correction, but this needs confirmation as trading opens on Friday.
Meanwhile, position taking and portfolio rebalancing on the exchange continued ahead of the Q3 earnings reporting season after end of the quarter window dressing by market operators and fund managers in September which supported the market to sustain it uptrend. Buying interests across some major sectors of the market and into fundamentally sound stocks as bargain hunters continued to cash in on the current recovery in preparation of expected historic move in this month and last quarter of 2025 as the nation economy remains on the path of growth and stable recovery.
Market volatility continued intraday as the benchmark NGX All-Share index closed marginally higher on a very high traded volume and positive market breadth, breaking out of consolidation range.
More companies continued to announce their closed period for Q3 financials expected to start pouring in any moment from next week for early filers, with PZ Cussons presented its first quarter earnings report showing a turnaround in the company’s fortune. Top and bottom lines rose by 48% and 390% respectively to N59.01 billion and N13.49 billion durng the period, translating to an Earnings Per Share of N3.29 each, a sign of what investors should expect from consumer goods companies in their Q3 numbers as the Naira’s exchange rate against major global currencies remain relatively stable to support planning in the real sector of the economy.
In equity investing or trading time and timing is very important, because seasonality is one of events and factors that will shape the market in this final quarter of this year. Despite the mixed sentiment witnessed so far and outlook of the market, the big uptrend remains intact above the T line and the 50-Day Moving Average, despite the material shift in the index and the ongoing volatility.
The sustained uptrend at the end of Thursday’s trading creates bargain opportunities in the market, but investors should trade some high cap stocks with caution, while repositioning portfolios, targeting consumer goods, industrial, some banking stocks, agrobusiness, insurance and other services providers stocks with strong fundamentals and earnings power capable of supporting price, and higher dividends payment at the end of the year. These are against the backdrop of new prices and improving macroeconomic indices, strong corporate earnings. Others are the prevailing mixed outlook for fixed income instruments yields due to rate cuts, declining inflation and relatively stable exchange rate.
To navigate the rest of the quarter and year profitably using fundamental and technical analysis, join investdata’s live sessions at noon every Monday, Wednesday and Friday “and also get investdata technical toolbox and other training materials 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 trends. 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 on Thursday continued to oscillates, pulling back to trade at $64.11 per barrel in the midst of hitting four months low and expectation of OPEC output increase weighing on the market due to oversupply concerns in the face Mideast uncertainty and US to provide intelligence to Ukraine for strikes on Russian energy infrastructure. Weak demand outlook in the face of production increase that may affect crude demand. Just as Russia-Ukraine war remains a major concern, as up and down movement in oil price remain also a concern, which has continued to drive volatility across markets.
Thursday’s trading opened slightly in the downside before rebounding at midday to afternoon trading, which was sustained for the rest of the session, despite oscillating on position taking in blue chip companies and others, a situation that pushed the Index to an intraday high of 142,997.73bps from its lows of 142,653.45ps, before closing above its opening figure at 142,979.44 bps.
Market technicals were positive and strong with lower volume traded, 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 95% buy position and 5% sell volume. The total transaction volume index stood at 1.20 points, just as the energy behind the day’s performance was strong, with Money Flow Index reading 70.28pts, from the previous day’s 68.76pts, indicating that funds entered the market.
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Index and Market Caps
At the end of Thursday’s trading, the benchmark NGXASI inched up with 268.98bps, closing at 142,979.44bps, from its 142,708.70bps opening level, representing a 0.19% up. Market capitalization also rose by N24.21bn to N90.75tr, from the previous day’s N90.50tr, which also represented a 0.19% value gain.
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Thursday’s upturn was driven by buying interests and accumulations in telcom giant- MTNN, GTCO, PZ, Eterna, Champion, Wema Bank, Custodian and Nahco, among others. This impacted mildly on Year-To-Date gain which inched up to 38.91%, while Market Capitalization YTD gain stood at N44.6tr, representing a 44.60% rise above its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes were in green, save for NGX Industrial that closed in red with 0.02%, while NGX Insurance led the advancers after gaining 0.42%, followed by, Consumer goods, Banking and Energy with 0.35%, 0.17% and 0.12% respectively.
Market breadth was positive as gainers outpaced losers in the ratio of 34:25, while activities in volume and value terms were down, after players exchanged 6.2 billion shares worth N54.45bn, driven by trades in Cornerstone, UBA, Wema Bank, First Holdco and Zenith Bank.
PZ and Eterna were the best performing stocks, gaining 10% and 9.94% respectively, closing at N37.95 and N37.05 per share respectively, on impressive Q1 numbers and market forces. On the flip side, RT Briscoe and Thomas Watt lost 9.89% and 9.82%, closing at N3.37 and N3.58per share, purely on the back of profit taking and selloffs for repositioning.
Market Outlook
We expect mixed sentiment to continue on bargain hunting and portfolio repositioning ahead of Q3 corporate earnings reports in the face of sector rotation, with all eyes are on the consumer price index for the month of September, as Stanbic IBTC reports on Purchasing managers index revealed increase in output as cost pressure eases.
However, pullbacks will create ‘buy’ opportunities amidst improving macroeconomic indices, just as more economic reforms will boost growth, a situation expected to support investment and market 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.
Ambrose Omordion
CRO|Investdata Consulting Ltd
ambrose.o@investdataonline.com
Tel: 08028164085, 08179547605
