Market Update for June 22

It was a quiet and a mixed session on the Nigerian Exchange on Thursday as profit taking activities persisted in the midst of buying interests and a negative outing to halt the three sessions of back to back gains on a less than average traded volume, and positive market breadth. Traders and investors continued to reassess the upside potentials of the stocks making new 52-week highs in the midst of profit taking and positive sentiment for the ongoing economic and financial sector reforms of the new administration.
Meanwhile the market is awaiting further guidelines, strategies and agenda to achieve all promised as part of the Renewed Hope Agenda of the current government. Ahead of end of the Q2 window dressing by portfolio managers, and the release of March year-end audited financials.
The NGX remains above the 59,000 basis points mark, positive sentiment and buying interests during the session, with the index still at its 16-year market high on above average traded volume. In the process, many stocks are hitting new 52-week highs on strong buying sentiments and expected fall in interest rates as the government looks to reform monetary policy after the recent unification the foreign exchange rates.
Some of the major sectors of the market were hit by profit-taking, while others witnessed increased buying interests on an increased inflow of funds as players took position in low, medium and high cap stocks, even as dividend yields of many companies become lower yet, ahead of the Q2 earnings reporting season. This is as more quoted companies notify the exchange and investing public of their closed periods and board meeting dates to approve the half-year financials. Also, all eyes are on audited financials of March year-end companies.
Despite the market pulling back at the end of Thursday’s trading, the index is still trading above its 100-Day Simple Moving Average and 200DMA on the daily and weekly chart, with a bearish divergence between the momentum and the index action, which calls for cautious trading. As such, technical traders and discerning investors must be guided, because higher prices will lead to lower dividend yields, even when the market’s Price to Earnings Ratio is relatively low. It however provides better opportunities for investors to hedge against inflation even when fixed income market yields look attractive and remain mixed in the face of high inflation.
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Oil price oscillation continued on Thursday, as it pulls back again to trade at $73.42per barrel in the midst of central banks rates hike and weak China economic recovery despite the recent rate cut, even as the Russia-Ukraine war remain a 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.
Trading started in the green but pulled back in the late afternoon on selloffs and profit taking, a situation that pushed the NGX All-Share Index to an intraday low of 59,211.26bps, from its highs of 59,373.28ps, before closing below it opening figure at 59,211.26 point.
Market technicals were positive and mixed with a lower volume traded when compared to the previous session in the midst of breadth favoring the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 88% buy position and 12% sell volume. The total transaction volume index stood at 0.97 points, just as impetus behind the day’s performance was strong, with Money Flow Index reads 83.66pts, from the previous day’s 83.22pts, indicating that funds entered the market, despite pulling back.
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Index and Market Caps
The benchmark NGX All-Share Index, at the end of Thursday trading shed 112.69 bps, closing at 59,211.26bps, from its 59,323.95bps opening level, representing a 0.19% down. Market capitalization lost N62.34bn to N32.24tr, from the previous day’s N32.30tr, which also represented a 0.19% value loss.
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The day’s downturn was driven by profit taking in the shares of Okomu Oil. GTCO, UBN, Conoil, UBA, Mansard, Honeywell and Ikeja Hotel, among others. This impacted Year-To-Date gain, as it fell to 15.66%, while Market Capitalization YTD gain stood at N4.42tr, representing 15.63% above its opening level for the year.

Mixed Sector Indices
Sectoral performance indexes were mixed, as the NGX Banking and Industrial Goods closed 0.6% and 0.02% lower respectively, while NGX Insurance led the advancers, after gaining 1.08%, followed by Energy and Consumer goods with 0.40% and 0.10% respectively.
Market breadth was positive as gainers outpaced losers in the ratio of 32:31, while activities in volume and value were mixed after players exchanged 615.92m shares worth N6.62bn, driven by trades in, Wapic Insurance, UBA, Universal Insurance, GTCO and Accesscorp.
NEM Insurance and Cornerstone Insurance were the best performing stocks, gaining 10% and 9.90% respectively, closing at N6.93 and N1.11per share respectively on positive market forces and sentiments. On the flip side, Lasaco and Sovereign Trust Insurance lost 10% and 9.84% respectively, closing at N2.34 and N0.55 per share, purely on profit taking and selloffs