Mixed Sentiments On Bargain Hunting Ahead Of Tier-1 Banks’ H1 Earnings, Portfolio Reshuffling

Market Update for September 7

Profit taking and selloffs on the Nigerian Exchange continued Thursday as highly priced stocks and others suffered losses that weighed on the benchmark NGX All-Share index which closed on a negative note in the midst of a low traded volume and negative market breadth which reflected profit taking in in blue chip companies and cautious trading at the market peak.
Despite the return of bearish momentum and pullbacks witnessed in the last two trading sessions, the market’s big uptrend remains intact ahead of macroeconomic data, audited half-year scorecards of the remaining first-tier banks and MPC meeting amidst material shift of the index and ongoing volatility. In the midst of all these, 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.
These notwithstanding, the NGX All-Share index’sbaction still traded above the 68,000 basis points mark, to consolidate at this level while, at the same time a distribution phase that indicates no supply which may likely attract smart money to the market any time from now. However, let us wait to confirm direction. The candlestick formation at the end of the session signaled a top reversal pattern as the 2008 resistance level turn support. Also, the market continues to interpret and digest the news of Oando’s acquisition of the entire shareholding of Nigeria Agip Oil’s assets and the objection raised by the Nigerian National Petroleum Company’s objections, as well as the planned delisting of PZ Cussons announced on the Exchange ahead of its expected full-year audited financials originally scheduled for publication on May 30, 2023.
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, as it pulled back to trade at $89.61 per barrel in the midst of global economic concerns that limits rally and production cuts, as China and US slow economic growth dampen sentiments. 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 the downside and was sustained, despite oscillating for the rest of the session on profit taking and buying interests in some stocks. This situation pushed the Index to an intraday low of 67,969.08bps from its highs of 68,316.40bps, before closing below the opening figure at 68,082.11bps.
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 selling sentiment as revealed by Investdata’s Sentiments Report showing 33% buy position and 67% sell volume. The total transaction volume index stood at 0.88 points, just as the momentum behind the day’s performance was strong, with Money Flow Index reading 78.79pts, from the previous day’s 79.22pts, indicating that funds left the market.
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Index and Market Caps
At the end of Thursday’s trading, the NGX All-Shsre Index, lost 201.17bps, closing at 68,082.11bps, from its 68,286.28bps opening level, representing a 0.30% decline. Market capitalization also fell by N111.75bn to N37.26tr, from the previous day’s N37.37tr, which also represented a 0.30% depreciation in value.
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Thursday’s downturn was driven by selloffs and profit taking in the shares of Dangote Cement, Nestle, NB, Dangote Sugar, Zenith Bank, Oando, Eterna and Nascon, among others. This impacted negatively on Year-To-Date gain which reduced to 32.84%, while Market Capitalization YTD gain stood at N8.09tr, representing a 34.50% rise above its opening level for the year.
Bearish Sector Indices
Sectoral performance indexes were down, except for the NGX Banking that closed higher by 0.10%, while the NGX Industrial goods led the decliners after losing 0.71%, followed by Consumer goods, Energy and Insurance with 0.65%, 0.12% and 0.03% respectively.
Market breadth turned negative as gainers outnumbered losers in the ratio of 30:26, while transactions in volume and value were mixed after investors exchanged 378.09m shares worth N8.38bn, driven by trades in Oando, Omatek, Dangote Sugar, Fidelity Bank and Accesscorp.
Beta Glass and Cadbury were the best performing stocks, gaining 9.97% and 9.86% respectively, closing at N51.85 and N15.60per share each, on market forces. On the flip side, Morisson Industry and Courtville Business Solution lost 9.89% and 7.69% respectively, closing at N2.55 and N0.60 per share, purely on the back of selloffs.

Market Outlook
We expect mixed sentiment as bargain hunters hit the market ahead of the expected half-year earnings reports of UBA, Accesscorp and Zenith Bank in the midst portfolio reshuffling for quarter end and 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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Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605