Market Update for September 9
Trading activities on the Nigerian Exchange started the new week on a negative note, reversing the previous gain on a very high traded volume and positive market internals. There was on the back of selloffs and profit-taking in highly priced stocks which weighed in on the benchmark NGX All-Share index as it closed lower even as volatility continued ahead of the August Consumer Price Index and inflow of more interim dividend paying banks’ earnings reports.
Monday’s selling sentiment hit some major sectors of the market in continuation of portfolio reshuffling and sector rotation in the face of the changing fundamentals and dynamics in the oil and gas sector of the nation’s economy. Market players are take advantage of the expected impact on industry and companies operating in this sector, considering the importance and demand nature of the products and services. This pullback and volatility creates buy opportunities for market players who understand the big picture of equity investment and its dynamics in any market condition. Knowing that investing strategies in any market work with seasonality and timing to deliver value for discerning investors and smart traders.
The distribution phase of the market impacted the NGX index’s action, with players picking value stocks at discounted prices in expectation of more banks’ interim dividend and earnings. This is especially true now that corporate numbers reveal the position of many companies on the exchange. The selling sentiment and pullbacks 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 correction and low valuation in the market to buy into value and defensive stocks to support rebound any moment from now.
The NGX index’s action is trading below the T-line and the two moving averages of 50-EMA and 50-SMA that indicates weak market in the midst of changing market fundamentals and technicals. Even when the index try to breakout the T line but came down. 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 ranging in the face of selling sentiments and profit taking as revealed by the candlestick formation and momentum indicators. The ADX is looking down at 26.71, while RSI and Money Flow Index were mixed to read 40.07 and 71.46 points against the previous session 42.33 and 69.08 points respectively. Market players should watch this current trend and trade caution in the face of funds entering the market on selloffs in some sectors. Also, trading volume pattern continued to oscillates, suggesting buying interest and selloffs in some sectors in the midst of players digesting the recent 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 Monday rebounded to continue its oscillation as it trades at $71.96 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.
Meanwhile, Monday’s trading opened in the upside before pulling back to oscillate for the rest of the session on profit taking in some highly capitalized stocks and blue-chip companies, despite the buying interest in others, a situation that pushed the NGX’s index to an intra-day low of 96,068.36 basis points from its highs of 96,620.02bps, before closing below its opening level at 96,206.46bps.
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 selling sentiment as revealed by Investdata’s Sentiments Report showing 25% buy position and 75% sell volume. The total transaction volume index stood at 1.47 points, just as impetus behind the day’s performance was relatively strong as Money Flow Index was up to read 71.46pts, from the previous day’s 69.08pts, indicating that funds entered the market, despite closing in the red.
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Index and Market Caps
The NGX’s All-Share Index at the end of Monday’s trading shed 227.07bps, closing at 96,206.46bps after opening at 96,433.53bps, representing a 0.24% decline. Market capitalization fell by N111.15bn, closing at N55.28tr from the previous day’s N55.40tr, representing a 0.24% value loss.
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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The downturn was driven by profit taking and selloffs in the shares of Transcorp Power, Julius Berger, Wapco, Accesscorp, Zenith Bank, University Press and Cutix among others. This impacted negatively on Year-To-Date gain, reducing it to 28.66%, while Market capitalization slowed down to N10.34tr, representing 35.09% above its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, with the NGX Consumer and Industrial Goods indexes closing 0.43% and 0.04% lower respectively, while the NGX Insurance index led advancers after gaining 2.48%, followed by Energy and Banking with 1.14% and 0.68% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 33:19, while activities in volume and value were up after investors exchanged 774.38m shares worth N14.65bn. Volume was driven by trades in Jaiz Bank, Zenith Bank, FBNH, GTCO and Japaul Gold.
Eterna and Tantalizer were the best performing stocks, gaining 10% each, closing at N33.00 and N0.77 per share respectively on the back of market forces and expectations respectively. On the flip side, Julius Berger and Transcorp Power lost 10% and 9.99% respectively, closing at N153.45 and N301.70 per share, purely on profit taking and selloffs.
Market Outlook
We expect mixed sentiment on bargain hunting and expectation of more interim dividend paying stocks half year numbers as sector rotation continue 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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