Market Update for September 10
The seesaw movement resurfaced on the Nigerian Exchange Tuesday, after which the composite NGX All-Share index rebounded sharply on increased buying interests across major sectors of the market, and especially highly priced stocks. This wiped out the loss suffered in the previous session on low traded volume and positive market breadth. The development was also on the back of bargain hunting and continued portfolio repositioning in the face of changing economic fundamentals and market momentum.
The buying sentiment was attributed to market players taking advantage of the recent pullbacks and corrections to buy into undervalued stocks with fair value, even as all eyes are on the inflow of earnings reports from the remaining interim dividend paying banks. Investors and traders are also betting on the August inflation data ahead of policy meeting to give a clear direction of the economy, just as the Q3 earnings season is around the corner to usher in the last quarter of the year that comes with seasonality and volatility needed to drive sentiments. As such, understanding the big picture of equity investment and its dynamics in any market condition will help players to create value.
The recovery phase of the market impacted the NGX index’s action, as players pick value stocks at discounted prices in expectation of quarter end window dressing by operators and fund managers. This is especially true after half year corporate numbers had revealed the position of many companies on the exchange. The buying sentiment and markup are different phases of the market that requires a change in 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 had signal strength after breaking out the T-line, even when is still 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 recovering in the face of buying 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 up to read 47.91 and 71.64 points against the previous session 40.07 and 71.46 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 on Tuesday fell, continuing its oscillation and trading below $70 at 69.64 per barrel in the midst of hurricane fear in US and weak macroeconomic data from two biggest economies. Coupled with OPEC delay in hiking output and expected rate cut by Fed in coming weeks. 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.
Tuesday’s trading started in the green and it was sustained throughout the session, despite oscillating positioning in blue-chip companies and profit taking in other stocks, a situation that pushed the NGX’s index to an intra-day high of 96,802.80 basis points from its lows of 96,151.57bps, before closing above its opening level at 96,802.80bps.
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 100% buy position and 0% sell volume. The total transaction volume index stood at 0.76 points, just as momentum behind the day’s performance was strong as Money Flow Index was up to read 71.64pts, from the previous day’s 71.46pts, indicating that funds entered the market.
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Index and Market Caps
At the close of Tuesday’s trading, the benchmark NGX’s All-Share Index gained 596.95bps, closing at 96,802.80bps after opening at 96,206.46bps, representing a 0.62% notch. Market capitalization rose by N343bn, closing at N55.63tr from the previous day’s N55.30tr, representing a 0.62% appreciation in value.
Attention: If you have not signed up for INVESTDATA’s buy and sell signal setup, don’t delay, because the number of stocks entering their oversold range has increased as market correction and pullbacks call for caution and positive chart patterns to be on our watchlist. These stocks have potentials to retrace, considering their earnings prospects and the oscillating moves in an upmarket and weak economy.
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Meanwhile, Tuesday’s upturn was driven by buying interest and accumulation in the shares of MTNN, Oando, Wapco, Eterna,Transcorp and CWG among others. This impacted positively on Year-To-Date gain, inched up to 29.46%, while Market capitalization slowed down to N10.89tr, representing 35.95% above its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, with the NGX Energy and Industrial Goods indexes inching up by 0.01% each, while the NGX Banking index led declincers after losing 0.51%, followed by Insurance and Consumer goods with 0.42% and 0.18% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 30:18, while transactions in volume and value were down after investors exchanged 406.19m shares worth N13.31bn. Volume was driven by trades in Oando, Accesscorp, Japaul Goods, FBNH and UBA.
RT Briscoe and Caverton were the best performing stocks, gaining 9.98% and 9.93% respectively, closing at N3.10 and N1.91 per share respectively on the back of market forces and expectations respectively. On the flip side, Learn Africa and Japaul Gold lost 9.69% and 6.67% respectively, closing at N3.73 and N2.52 per share, purely on profit taking.
Market Outlook
We expect mixed sentiment on bargain hunting and 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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CRO|Investdata Consulting Ltd
info@investdata.com.ng
ambrose.o@investdataonline.com
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08028164085
