Mixed Sentiments May Linger, Amid Cautious Trading, Profit Taking, Portfolio Realignment

Market Update for June 5

It was a mixed session on the Nigerian Exchange on Monday, starting the first full trading week of June on a negative note, with the benchmark NGX All-Share index halted five consecutive bullish sessions, continuing its ranging mood and consolidation after forming a triple top on a daily time frame. This signaled a reversal chart pattern or a breakout, depending on market forces as trading opens on Tuesday. At this critical level the NGX has been on the decline over the last five trading sessions, amidst a negative market breadth, and low traded volume. This volume pattern as the market side-trends calls for cautious trading and investing until a definite direction of breakout or pullback is given.
In recent days and weeks, the NGX index action on a daily, weekly and monthly chart pattern had formed a double top that indicates correction as many stocks on the exchange hit new 52-week high. At this level, the possibility of a market pullback is high. Also, the market has hit a 16-year high in the midst of a dicey outlook for the month of June that has been a period of profit taking and selloffs for portfolio repositioning ahead of the half-year earnings reporting season when investors position for Q3. Already, quoted companies have started notifying the exchange and investors of their closed period and board meeting dates to approve their first half financials. PZ, for example, informed the investing public of its closed period for unaudited result for the full year ended May 31, 2023, just as all eyes are on the audited financials of March year-end companies.
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Oil price oscillation continued, sliding marginally to trade at $76.49per barrel in the midst of Saudi sudden output cut and OPEC after their meeting, even when fear of fed rising rates again in June, in the face of China economic recovery remain mixed in the midst of central banks rates hike that is driving economic contraction. Just as Ukraine and Russia war continued. This is in addition to rising geopolitical tension across the globe, the prevailing high interest rate regime and soaring inflation, despite slowing down across the globe remain potent threat to world economy. 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, Monday’s trading started slightly in the downside and was sustained despite oscillating for the rest of the session, on profit taking and positioning in blue chip stocks, a situation that pushed the NGX All-Share Index to an intraday low of 55,694.52 basis points, from its high of 55,820.50ps, before closing marginally below it opening figure at 55,807.09 point.
Market technicals were negative and mixed with a lower volume traded when compared to the previous session in the midst of breadth favoring the bears on a buying sentiment as revealed by Investdata’s Sentiments Report showing 89% buy position and 11% sell volume. The total transaction volume index stood at 0.57 points, just as energy behind the day’s performance was strong, with Money Flow Index reads 82.36pts, from the previous day’s 82.90pts, indicating that funds entered the market.
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Index and Market Caps
Monday’s trading ended with the benchmark NGX All-Share Index sliding by a marginal 13.41bps to 55,806.71bps, from its 55,822.82bps opening level, representing a 0.03% drop, just as market capitalization fell by N8.8bn to N30.39tr, from the previous day’s N30.39tr, which also represented a 0.03% value loss.
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The day’s downturn was driven by profit taking in UBA, SterlingNG, Geregu, Africa Prudential and Transcorp, among others, which impacted negatively on Year-To-Date gain which dropped to 8.89%. Market capitalization YTD gain stood at N2.39tr, representing 8.85% above its opening level for the year.

Bullish Sector Indices
Sectoral performance indexes closed in the green, except for the NGX Industrial Goods that closed 0.01% lower, while the NGX Energy led the advancers after gaining 2.55%, followed by Insurance, Banking and Consumer goods with 1.31%, 0.27% and 0.06% respectively.
Market breadth turned negative as losers outpaced gainers in the ratio of 27:25, while activities in volume and value were mixed after players traded 369.78 million shares worth N19.84bn, driven by trades in, Geregu Power, NPF Microfinance, Accesscorp, Zenith Bank and UBA.
NEM Insurance and Omatek were the best performing stocks, gaining 10% each, closing at N5.50 and N0.22 per share, on positive earnings and market forces. On the flip side, John Holt and Courtville Business Solution lost 9.95% and 9.80% respectively, closing at N1.72 and N0.46per share, purely on profit taking.

Market Outlook
We expect the mixed sentiments to continue on cautious trading and profit taking, as portfolio realignment persists in the face of new government economic policies, in the midst of markdown dates, dividend payment and expected March year end audited accounts.
We note that discerning investors have continued to target fundamentally sound companies and defensive stocks to protect their portfolios post-dividend adjustments. Any pullback at this point may add more strength to upside potentials. As such, investors should take advantage of price rally to take profit. Also looking at the trends and events across the globe and domestically.

Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605