Mixed Sentiments, Bargain Hunting, As Investors Await H1 Accesscorp, Q3 Earnings

Market Update for September 21
The sell sentiment on the Nigerian Exchange continued Thursday as profit booking hit highly priced stocks and blue chip companies, weighing in on the benchmark NGX All-Share index which closed lower on a very high traded volume, amidst negative market breadth. In the process, it extended the losing streak for a second consecutive session, even as the NGX index’s action formed a top reversal pattern to trade within it consolidation range. At the same time, the index entered the distribution phase ahead of the remaining interim dividend paying companies results. This is also happening on a day the Central Bank of Nigeria announced the postponement of its regular Monetary Policy Committee meeting slated for next week. All of these are happening in the midst of quarter end window dressing by fund managers.
Already, the Q3 earnings reporting season draws closer with mixed expectations, due to the ongoing fiscal reforms by government, as well as foreign exchange market challenges that have persisted. The bearish hammer formation at midweek, confirmed the pullback as expected on Thursday, following which it is important that we trade and invest wisely ahead of events and factors that will shape the market in the final quarter of this year. Despite the mixed sentiment witnessed so far, the market’s big uptrend remains intact as investors await the scorecards of Accesscorp, AXA Mansard and CHI Plc, and interim dividend announcements, which their delay has already started to tell on these companies share prices on the exchange in the midst of material shift of the index and the ongoing volatility.
Notwithstanding the market’s pullback and bargain opportunities, investors should trade consumer and industrial goods with caution while repositioning their portfolios, the targeting services industry stocks with strong fundamentals and earnings power capable of supporting price and higher dividend payment at the end of the year. These are against the backdrop of the changing market conditions and trading environment due to macroeconomic headwinds, mixed corporate earnings and the prevailing mixed outlook for fixed income instruments yields and rates in the face of rising inflation, high interest rate and exchange rate challenges due to the high volatility in the exchange. However, candlestick formation at the end of the session signals a bearish pattern that supports downtrend, just as the 2008 resistance level turned another strong support level to watch.
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Oil price oscillation continued, as it inched to trade at $93.44 per barrel in the midst of demand fear and supply tighten as a result of by Saudi Arabia and Russia production cut, as new rate waves underway. The Russia-Ukraine war remains a major concern, the prevailing high interest rate regime and slowing inflation. Also, supply tightened due to the Russia-Ukraine conflict that entered the second year. This up and down movement in oil price, has continued to drive volatility across markets.
Meanwhile, Thursday’s trading started slightly in red and was sustained throughout the session, despite oscillating on profit taking and buying interest in energy stocks, a situation that pushed the Index to an intraday low of 68,215.40bps from its highs of 68,377.26bps, before closing below its opening point at 68,271.14bps.
Market technicals were negative and mixed with a higher volume traded when compared to the previous session in the midst of breadth favoring the bears on a mixed sentiment as revealed by Investdata’s Sentiments Report showing 34% buy position and 66% sell volume. The total transaction volume index stood at 2.27 points, just as the impetus behind the day’s performance was strong, with Money Flow Index reading 63.25pts, from the previous day’s 74.89pts, indicating that funds left the market.
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Index and Market Caps
At the end of Thursday trading, the composite NGXASI fell by 64.58bps, closing at 68,217.14bps, from its 68,335.72bps opening level, representing a 0.09% drop. Market capitalization also fell by N35bn to N37.36tr, from the previous day’s N37.40tr, which also represented a 0.09% value loss.
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Thursday’s downturn was driven by profit taking in MTNN, Oando, NB, UBA, Accesscorp, FBNH, NGXGroup, Chams and SterlingNG, among others. This impacted mildly on Year-To-Date gain which reduced to 33.21%, while Market Capitalization YTD gain stood at N8.56tr, representing a 35.33% rise above its opening level for the year.

Bullish Sector Indices
Sectoral performance indexes were green, save for NGX Banking that closed lower by 0.46%, while NGX Insurance led the advancers after gaining 0.26%, followed by, Energy, Consumer and Industrial goods with 0.19%, 0.05% and 0.01% respectively.
Market breadth was negative with losers outnumbering gainers in the ratio of 30:20, while transactions in volume and value were up after players exchanged 1.12bn shares worth N5.82bn, driven by trades in Universal Insurance, Oando, Japaul Gold, Accesscorp and UBA.
John Holt and Daar Communication were the best performing stocks, gaining 9.55% and 9.52%, respectively, closing at N1.72 and N0.23 per share respectively, on market forces and sentiments. On the flip side, Oando and Lasco lost 9.93% and 9.71% respectively, closing at N13.15 and N1.86 per share, purely on the back of profit taking.

Market Outlook
We expect mixed sentiments to linger on bargain hunting and profit taking ahead of the expected half-year earnings reports of Accesscorp in the midst of portfolio reshuffling for quarter end and continued sector rotation.
However, pullbacks are creating buying opportunities amidst the economic reforms of the government, just as more policy pronouncements and economic managers hit the ground running, a situation expected to offer investment 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.

Theme Thriving In A Changing Macroeconomic Climate: Identifying Opportunities, Waves & Paths On NGX
1. Navigating Market Dynamics: Insights For Profitable Strategies- Alhaji Garba Kurfi, MD/CEO APT Securities & Funds Ltd)
2. Mastering Market Volatility: Chart & Analysis For Higher Returns- Mr Abdul-Rasheed Oshoma Momoh, Head Capital Market at, TRW Stockbrokers Ltd
3. The Power of Macroeconomic Data In Equities’ Trading & Investing- Mr Olatunde Amolegbe, MD/CEO, Arthur Steven Asset Management Ltd
4. Understanding The Link Between Fundamental, Technical and Sentiment Analyses In Picking Stocks- Mr Ambrose Omordion, CRO, Investdata Consulting Ltd.

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CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605