Market Update for September 20
Profit taking resurfaced on the Nigerian Exchange at the midweek, following the recent interim dividend investing, bargain hunting and impressive half-year earnings of the banks that had supported the market rally before now. Also, the NGX index’s action had formed a top reversal pattern as it approaches another peak after witnessing a markup phase of improved sentiment and strong momentum ahead of the remaining interim dividend paying companies results. There is also the Monetary Policy Committee meeting of the Central Bank of Nigeria next week, in the midst of quarter end window dressing by fund managers and others as the market trades in a healthy consolidation range. 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 had persisted.
The key performance NGX All-Share index closed slightly lower on an above average traded volume and marginally negative market breadth to halt the three sessions of back to back gains revealing the bearish situation after forming a bearish hammer that supports reversal of trend, which needs confirmation as trading opens on Thursday. So, 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 at the midweek, the market’s big uptrend remains intact as investors await the scorecards of Accesscorp, AXA Mansard and CHI Plc, and interim dividend announcements. Other factors amidst material shift of the index and the ongoing volatility.
Notwithstanding however, 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.
To navigate the rest of the quarter and year profitably using fundamental and technical analysis, join investdata’s live sessions at noon every 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 selloffs. Despite the mixed volume pattern witnessed in recent days, it is time to shop for undervalued stocks, sector rotation, go for defensive stocks at the next insider playing opportunity.
Oil price oscillation continued, sliding down to trade at $92.69 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.
Midweek’s trading opened slightly in the downside and was sustained for the rest of the session, despite oscillating on profit taking and buying interest in energy stocks, a situation that pushed the Index to an intraday low of 68,113.02bps from its highs of 68,495.83bps, before closing marginally below its opening figure at 68,335.72bps.
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 mixed sentiment as revealed by Investdata’s Sentiments Report showing 58% buy position and 42% sell volume. The total transaction volume index stood at 1.21 points, just as the impetus behind the day’s performance was strong, with Money Flow Index reading 74.89pts, from the previous day’s 67.17pts, indicating that funds entered the market, despite sliding down.
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Index and Market Caps
The benchmark NGXASI, at the end of Wednesday’s trading slide by 23.50bps, closing at 68,335.72bps, from its 68,359.22bps opening level, representing a 0.03% growth. Market capitalization also fell by N12.87bn to N37.40tr, from the previous day’s N37.41tr, which also represented a 0.03% value loss.
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Meanwhile, the downturn was driven by profit taking in Transcorp Hotel, UBA, Fidelity Bank, Dangote Sugar, Flourmill, Accesscorp, FBNH, NGXGroup, CHI Plc and Nascon, among others. This impacted mildly on Year-To-Date gain which reduced to 33.34%, while Market Capitalization YTD gain stood at N8.61tr, representing a 35.42% rise above its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, as the NGX Banking and Consumer Goods closed lower by 0.97% and 0.4% respectively, while NGX Energy led the advancers after gaining 0.63%, followed by Industrial goods with 0.02%, as NGX Insurance closed flat.
Market breadth turned marginally negative with losers outnumbering gainers in the ratio of 28:27, while transactions in volume and value were down after players exchanged 566.63m shares worth N5.39bn, driven by trades in Oando, Courtville Business Solution, Chams, Japaul Gold and Accesscorp.
Sunu Assurance and Berger Paints were the best performing stocks, gaining 10% and 9.91%, respectively, closing at N0.88 and N12.75 per share respectively, on market forces and sentiments. On the flip side, Transcorp Hotel and Ikeja Hotel lost 10% and 9.93% respectively, closing at N45.90 and N2.72 per share, purely on the back of profit taking.
We expect mixed sentiments to linger on bargain hunting and profit taking ahead of the expected half-year earnings reports of Accesscorp and MPC meeting 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.
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