Mixed Sentiments, Mild Bull-run Ahead, On Bargain Hunting, As Investors Await Q3 Earnings Inflow

Market Update for the Week Ended October 6 and Outlook for October 9-13
It was a mild bull run on the Nigerian Exchange in the first short trading week of October, halting three consecutive weeks of bear wave on a rekindled buying interest in blue chip companies. This was due to the mixed sentiment and increased volatility as bargain hunters took advantage of recent pullbacks and price corrections to position ahead of the Q3 earnings reporting season, the September Consumer Price Index and expected positive statements from the fiscal or monetary authorities.
Despite the oscillation and mixed sentiments witnessed during the period, the NGX index’s action remained on its consolidation range, as the 2008 strong resistance level turned support, any breakdown of 66,000 points will confirm the market’s entry into the decline phase. As all eyes are on the seasonality associated with the last quarter of 2023. Noteworthy is the stagflation environment that has continued to influence portfolio repositioning and sectorial rotation by investors.
The benchmark NGX All-Share index remained above the T line on a weekly time frame to resist further decline, ahead of its critical support levels, amid buying interest and selloffs in highly priced stocks. These pushed the market slightly higher in the midst of a continued oscillation in transaction volume pattern, further confirming the wait-and-see attitude of market players, who are on the lookout for the Q3 macroeconomic numbers and corporate earnings, in the face of a dicey economic outlook and sovereign risk concerns.
Stock prices across the major sectors of the market witnessed a rebound, including some large cap stocks and blue-chip companies which reflected on the weekly advancers/decliners ratio, while position taking hit banking stocks and others, despite pulling back on selloffs and fears in recent time. It is noteworthy that recent earnings from the banking sector and others revealed the undervalued state of the market and individual stocks, amid expectations that the prevailing low Price to Earnings ratios and divergence in real value and current market prices could inspire a rebound. However, factors and seasonality needed to support the market are unfolding amid inflationary pressure and slow economic recovery.
The low liquidity and mixed yields in the fixed income market has, so far, left the equity space relatively quiet since the postponement of the September meeting of Central Bank of Nigeria’s Monetary Policy Committee (MPC). This has reflected in the volume of transactions that indicates the absence of even the domestic institutional investors like pension and fund managers in the market.
The low supply and demand in the market is also an indication that smart money can mark-up the price at any time and without notice. These, notwithstanding, we urge investors to wait for confirmation of the trend, with bargain hunters already taking advantage of the back-to-back pullbacks to position in stocks with strong earnings capacity. Accesscorp’s share price was adjusted for interim dividend of 30 kobo during the week, just as Jaiz Bank notified the market of its right issue of 5.41bn shares at N1.00 on the basis of 87 new ordinary shares for 250 shares held as of Friday, October 6, 2023.
Meanwhile, market volatility continues to support technical traders in the midst of prevailing mixed sentiments, resulting from portfolio repositioning and sector rotation in the midst of relatively low volume and increasing earnings yields that signal the possibility of higher payouts at the year-end. This is especially true of those that suffered losses in the midst of the strong numbers posted by these companies, which revealed their undervalued state, as seen in the high dividend yields pointing to the possibility of bargain hunters taking position to hedge against the soaring inflation in the country.
The NGX index’s action on a daily and weekly charts are still trading above the 50-day moving average, as mixed momentum continued across the sectors. Portfolio rebalancing has increased in the midst of expected Q3 interim dividend payment. It is therefore time to use technical tools, if you have been ignoring the charts and fighting the trends, it is your chance to step up your game. At this current market mood, investors and traders should target leaders in the various sectors with strong fundamentals, and positive technicals as the market is on an uptrend movement on the strength of funds entering the equity space.
To navigate Q4, 2023 market volatility and its mixed outlook profitably using fundamental and technical analysis to run, join investdata 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 market correction. As volume of transaction witnessed within the week remain above the average traded volume, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.
Oil price during the week under review continued its oscillation, to record the first highest weekly loss after hitting a 10-month high at $84.58 per barrel in the midst of production cuts, weak demand and fear of rate hikes. This is even as Russia cut export of gas and diesel to Europe, as fear of a global recession resurfaced. We note also the rising geopolitical tensions across the globe and supply disruptions longer, due to the Russia-Ukraine war that has lingered for more than a year, and is indeed escalating. The up and down movement of oil prices also continues to drive volatility across different investment windows.

Movement Of NGXASI
Of the four trading session of the week, following the declaration of Monday, October 2, as public holiday to mark Nigeria’s 63nd independent anniversary, the NGX index had a mixed trend and performance with two days of down market and two up, amid pullbacks and retracements on position taking. Some major sectors and blue chip stocks rebounded, driving the oscillations that create opportunities for players to reposition their portfolios, amid interpretation and analyses of the prevailing macroeconomic conditions and expected Q3 earnings inflow.
The week’s trading started on a positive note, halting the previous session’s loss, by 0.59%, followed at midweek with a decline of 0.43%, before inching up by 0.13% on Thursday. There was a seeming pulled back of 0.17% on Friday after the NGXASI broke out the T line to test 67,187.87 points on bargain hunting. This was short-lived by selloffs in MTNN, bringing the week’s cumulative gain to 0.11%, compared to the previous week’s 1.40% loss position.
Consequently, the NGX All-Share Index inched by 72.43 basis points, closing at 66,454.57bps, compared to the week’s 66,382.14bps opening level, after touching an intra-week high of 67,187.87bps and a low of 66,227.86bps. Market capitalisation also rose by N179bn, representing a 0.49% appreciation in value during the period. The different in percentage growth followed the listing of 190m shares of VFD Group Plc at N244.88 per share.
During the period under review, the advancers’ table was dominated by medium and large cap stocks amid the position taking that hit high priced stocks due to volatility and mixed sentiments. Also notable is the fact that investors are taking advantage of the price correction to buy into value and high dividend yield companies.
Market breadth during the week turned positive as gainers outnumbered losers in the ratio of 40:36 on selling sentiment as revealed by investdata sentiment report showing 25% ‘buy’ volume and 75% sell position. Growth in Money Flow Index was flat at 80.71bps from the previous week’s 80.86 points, an indication that funds left the market on a weekly chart, despite the up market.
The NGX index action continued in its distribution phase, as the index consolidated on weekly and daily time frame, with low traded volume signaling cautious trading, as the seesaw movement continued on the daily time frame below the T line on a mixed sentiment and weak momentum. This was despite signaling a reversal on Friday as the market remains relatively strong in the midst of increased volatility and low liquidity. We note also that the index is trading slightly above the ‘T’ line and 50-day moving average on the weekly time frame to signal possibility of continuation or reversal, which the state of Q3 financials and September consumer price index will determine.

Mixed Sectoral Indices
The sectorial performance indexes were mixed, as NGX Insurance and Industrial goods closed lower by 3.11% and 1.38% respectively, while the NGX Banking led the advancers’ after gaining 1.43%, followed by Consumer Goods with 0.17%. Just as NGX Energy finished flat for the period.
Transactions in volume and value were up, as investors exchanged 2.41bn shares worth N22.12bn, compared to the previous week’s 1.34bn units valued at N17.92bn. Volume was driven by Financial Services, Healthcare and Oil/Gas. The was boosted specifically by trading in Neimeth Pharm, Universal Insurance, Fidelity Bank, Oando and Transcorp.
FTNCocoa and RT Briscoe were the best-performing stocks for the week, gaining 19.21% and 16.33% respectively, and closing at N1.80 and N0.57per share on sentiment and market forces. On the flip side, CHI Plc and ABC Transport lost 19.05%and 17.72% respectively, at N1.02 and N0.65 per share, purely on profit taking and selloffs.

Outlook for the week
We expect mixed sentiment and mild bullish market performance on bargain hunting opportunities and revaluation of equities, ahead of September inflation report and Q3 earnings reporting season. Also, Investors and traders await the unveiling of agenda by CBN new management term and key Ministries. However, retracement to the 65,559.46bps level and below is possible on profit taking as global and domestic events unfold.

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