Market Update for September 24
The bullish momentum on the Nigerian Exchange continued Tuesday, coinciding with the end of the Central Bank of Nigeria’s Monetary Policy Committee with members unanimously voting to further increase the benchmark Monetary Policy Rate by 50 basis points to 27.25%, and ahead of midweek’s Treasury Bills primary market auction. Other factors included the end of quarter window dressing, and the Q3 earnings reporting season that ushers in the last quarter of the year 2024 which comes with seasonality and sentiment. The benchmark NGX All-Share index closed higher on a very high traded volume and positive market breadth to sustained the bull transition for the third successive session.
It is obvious that Nigeria’s economic managers are not working together to put the economy in the path of progress, as they are sacrificing economic growth to attract foreign inflow at the detriment domestic business activities, due to high cost of funds. All over the globe, rate hike had worked for many central banks to checkmate inflation in their domain which had recently ushered in easing monetary policy to trigger economic activities and drive expansion.
The buying sentiment continued on the NGX in the face of uptrend, as players digests the outcome of policy meeting of CBN, as the current state of the market with likely pullback or correction presents which present an opportunity to buy into undervalued and fairly priced 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 Q3 numbers. Also, companies have started notifying the market of their closed period and board meeting for approval of scorecards.
Given that strength has returned to the market, with the NGX index’s action trading above the T-line and the two moving averages of 50-EMA and 50-SMA that indicates a 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 recovery, despite the seeming slowdown inflation. 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 on a bullish mood, but forming a double top chart pattern, signaled correction underway before the expected corporate numbers start hitting the market as revealed by the candlestick formation and momentum indicators. As ADX inched up at 21.12, while RSI and Money Flow Index were up to read 64.77 and 68.97 points against the previous session 63.17 and 67.52 points respectively. Market players should watch this current trend and trade wisely in the face of funds entering the market on buying interest in some sectors and profit taking in others. Also, trading volume pattern continued to oscillates, suggesting accumulation and selloffs in some sectors in the midst of players digesting banking earnings and outcome of MPC meeting.
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 rose on Tuesday. Trading at $75.04 per barrel in the midst of china resuming importation on rate cut and stimulus, despite tropical storm and low US inventories. As rate cuts by Fed is likely to boost demand, even as OPEC delay plans to increase production. Just as the 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 was sustained for the rest of the session, despite oscillating on buying interest in financial stocks and other blue chip companies, a situation that pushed the NGX’s index to an intra-day high of 98,583.12 basis points from its lows of 98,254.56bps, before closing above its opening level at 98,568.59bps.
Market technicals for the session were positive and strong with higher volume when compared to the previous session in the midst of breadth that favour the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 96% buy position and 4% sell volume. The total transaction volume index stood at 1.57 points, just as momentum behind the day’s performance was strong as Money Flow Index was up to read 68.97pts, from the previous day’s 67.52pts, indicating that funds entered the market, despite the rate hike by CBN.
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Index and Market Caps
The composite NGX All-Share Index at the end of day trading gained 181.99bps, closing at 98,568.59bps after opening at 98,386.60bps, representing a 0.18% up. Market capitalization rose by N104.58bn, closing at N56.64tr from the previous day’s N56.54tr, representing a 0.18% appreciation in value.
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Meanwhile, the session upturn was driven by position taking in the shares of Wapco, Fidelity Bank, FBN Holdings, UBA, Accesscorp, Transcorp, Mansard, Ellah Lakes and Wema Bank among others, which impacted positively on Year-To-Date gain as it increased to 31.82%, while Market capitalization inched up to N11.96tr, representing 38.48% above its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed with the NGX Consumer Goods and Energy index close lower by 0.28% and 0.11% respectively, while the NGX Banking index led advancers after gaining 3.01%, followed by Insurance and Industrial goods with 2.16% and 0.04% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 35:21, while transactions in volume and value were mixed after investors exchanged 763.00m shares worth N11.78bn. Volume was driven by trades in Fidelity Bank, Transcorp, UBA, Caverton and Ellah Lakes.
FBNH and Ellah Lakes were the best performing stocks, gaining 9.93% and 9.76% respectively, closing at N31.00 and N3.71 per share respectively on the back of market forces and expectations respectively. On the flip side, Oando and Okomu Oil lost 10% and 9.98% respectively, closing at N72.00 and N376.00 per share, purely on profit taking.
Market Outlook
We expect mixed sentiment to continue as players reposition their portfolios and digest MPC meeting outcome ahead quarter-end, Q3 earnings session and bargain hunting. Also, sector rotation continues in the market continue, 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
ambrose.o@investdataonline.com
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08028164085
