Market Update for September 18
The bullish momentum on the Nigerian Exchange continued at the midweek, following demand for highly priced stocks and blue chip companies that impacted positively on the benchmark NGX All-Share Index as it closed higher on a low traded volume and positive market internals. This extended the bull transition for the fourth successive session on the back of increased bargain buying across some major sectors of the market and sector rotation. Also, it formed a top chart pattern that signals reversal or continuation of trend, depending on market forces as portfolio repositioning persist.
The changing global market fundamentals as major central banks of the world are ending the rate hike cycle with rate cuts that usher in monetary policy easing to boost economic activities and flow of funds likely to flow towards emerging markets like the NGX. As such, experts wonder if these rate cuts in US and others will influence the outcome of next week’s monetary policy committee meeting of the Central Bank of Nigeria (CBN). This is based on th reality that inflationary pressure in the country is slowing down and the fixed income market yields declining as reflected in the TB primary market auction recently. The continued mismatch of government policies today shows that the fiscal and monetary authorities are not working together to put this nation economy in the path recovery and growth.
The bullish sentiment is continuing in the markup phase and players positioning ahead of the quarter end window dressing and Q3 earnings reporting season in October. The current state of the NGX presents an opportunity to buy into undervalued and fairly value companies as revealed by their half-year corporate numbers and price to earnings ratios. This recovery and markup phase are different dynamics of the market that require 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 rally as all eyes are on the outcome of policy meeting next week.
Strength has return to the market, as NGX index’s action is trading above the T-line and the two moving averages of 50-EMA and 50-SMA that indicates bullish momentum 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. 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 has broken out the 50 simple moving average and set to breakout another strong resistance level of 98,631.04 in the face of buying sentiments and profit taking as revealed by the candlestick formation and momentum indicators. As ADX inched up at 21.63, while RSI and Money Flow Index were mixed to read 62.66 and 78.17 points against the previous session 57.74 and 78.41 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 digesting banking earnings and consumer price index report.
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 moved up, to continue its oscillation, trading at $73.64 per barrel in the midst of jumbo Fed rate cut and demand concerns, as OPEC delay plans to increase production. Even 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, midweek’s trading session opened in the green and was sustained throughout the session, despite oscillating on buying interest in blue chip companies and others, a situation that pushed the NGX’s index to an intra-day high of 98,238.25 basis points from its lows of 97,582.57bps, before closing above its opening level at 98,230.92bps.
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 99% buy position and 1% sell volume. The total transaction volume index stood at 0.74 points, just as impetus behind the day’s performance was strong as Money Flow Index was down slightly to read 78.17pts, from the previous day’s 78.41pts, indicating that funds left the market, despite closing high.
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Index and Market Caps
At the close of midweek’s trading, the NGXASI gained 545.28bps, closing at 98,230.92bps after opening at 97,685.64bps, representing a 0.56% growth. Market capitalization rose by N444.94bn, closing at N56.45tr from the previous day’s N56.00tr, representing a 0.56% appreciation in value.
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The upturn was driven by buying interests and accumulation in the shares of Geregu Power, Oando, FBNH, Accesscorp, Ucap and Eterna among others, which impacted positively on Year-To-Date gain as it increased to 31.37%, while Market capitalization inched up to N11.57tr, representing 37.95% above its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, as NGX Consumer and Industrial goods index close lower by 1.06% and 0.07% respectively, while the NGX Banking index led advancers after gaining 1.06%, followed by Insurance and Energy with 0.59% and 0.35% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 28:26, while transactions in volume and value were down after investors exchanged 361.39m shares worth N7.57bn. Volume was driven by trades in Japaul Gold, FBNH, UBA, UPDC and Transcorp.
Honeywell and Meyer were the best performing stocks, gaining 9.96% and 9.95%, closing at N5.41 and N6.41 per share respectively on the back of market forces and expectations respectively. On the flip side, NNFM and Berger Paint lost 10% and 9.81% respectively, closing at N39.15 and N21.60 per share, purely on profit taking.
Market Outlook
We expect mixed sentiment to continue as players reposition their portfolios ahead quarter-end and Q3 earnings session in the midst of profit taking and 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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CRO|Investdata Consulting Ltd
info@investdata.com.ng
ambrose.o@investdataonline.com
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08028164085
