Market Update for September 29
The bears dominated trading on the Nigerian Exchange Thursday amid market reactions to the latest Treasury Bills’ auction rates for September which jumped across all the tenors, in the face of inflationary environment at 20.52% leaving this window in real negative return that requires portfolio realignment and management among investors, if they must preserve value of their investment.
The benchmark NGX All-Share index closed lower, wiping out previous day’s gain in the midst of selloffs and profit taking due to the rate hike, despite the seeming position taking in blue chip stocks. The index was weighed down by sell down in highly priced stocks such as Nestle on a very high traded volume and negative market breadth. Cautious trading continues at this critical support levels of the market ahead of Q3 corporate earnings in the midst low valuation and liquidity in the market.
The rate hike adjustment has further triggered another round of sector rotation and selling pressure in the market, as a result of aggressive hawkish monetary policy across the globe, which caused some countries to go back to intervention to prevent the collapse of their economy, as the nation’s high debt profile wouldn’t survive this rising rate, especially at the World Bank and IMF continue have warned central banks to rethink and avoid pushing the global economy into recession. We see that is already happening in UK, China, Japan and others. It is time for the Nigerian central bank and its Monetary Policy Committee to have a rethink before things goes out of hand.
The last quarter of 2022 is finally here, but we need to finish the year strong, so join us this Saturday at Investdata Master Class, this is where we take a step back, analyze the general direction of the major sectors trend, and then break it down into shorter timeframes for more tactical opportunities. The low valuation of NGX, high earnings and dividend yields on improved earnings released so far in the year, coupled with the expectation of third quarter corporate earnings to shape the market direction in the face of inflation hitting 17 years high above 20%, causing many players stay on the fence, waiting to confirm direction before jumping in, as outlook for the economy and the financial market remains unpredictable.
Despite the lingering high interest rates atmosphere, rising inflation and slowing industrial output as a result of policy changes and uncertainty around the globe, there are sectors, industries and individual stocks that are still seeing positive activities from traders and investors. There are stocks players should pay attention to, as the correction in the NGX index action create buying opportunity in some sectors and individual defensive stocks with high dividend high yield and positive earnings growth.
Market internals are revealing the hidden forces that work for both short and long-term traders to get into the best position and allow you to stay in them for maximum profit, despite the market rebounding or weaken further. The market’s internals that measure the forces behind the advancers and associated volume of the uptick or downtick. These two ratios tell you everything you need to know to predict future price movements. So, the volume pattern and index structure in recent sessions show position taking, while funds enter some stocks as revealed by money flow index which need to be confirmed, especially as negative sentiment supported the previous session candlestick formation.
In the current decline phase of the market, the decision of when to buy or sell individual stocks or an index, is always based on price actions and the money flow direction which combines price and volume. We only want to hold stocks that are increasing, or at least retaining their value, while avoiding equities that are on the decline, and the toolset to evaluate price action is technical analysis.
This is not the time to use classical technical analysis that does not works in the changing volatile market like ours today. That is why it’s never been more important to join me at the upcoming Q4 Master Class in October, the largest quarterly traders’ summit in Nigeria. I will be sharing new actionable strategies and real trading education that will arm you with the tools that will help you meet your financial goals for the rest of the year 2022 and beyond. Also, the last quarter of the year is around the corner, are you prepare to take advantage of seasonality to recover your losses and boost your gains?
To navigate the rest of the month 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 range market. Despite the mixed sentiment witnessed, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.”
Oil price continued its oscillation, as it slides down again to trade at $88.45 on rescission fear in the midst of supply tighten due to Russia Ukraine war. The weak demand and fear of recession around the globe on hawkish monetary policy by central banks, just as China COVID-19 lockdown come to an end. The up and down movement of oil price also continues to drive volatility in the face of rising interest rates and inflation. Despite the bailout package of the Chinese government to simulate economic activates and stable employment, as well as that of Germany aimed at managing the energy crisis.
Thursday’s trading started slightly in the downside and was sustained for the rest of the day, despite oscillating on panic selling across the blue chip stocks, mid and large cap companies shares, a situation that pushed the NGX’s index to breakdown the psychological line of 49,000 and touched intraday low of 48,947.91bps from its highs of 49,218.17 bps before closing below its opening points at 48,964.83bps.
Market technicals were negative and mixed, with higher volume of shares traded than the previous day in the midst of breadth favoring the bears on a selling sentiment as revealed by Investdata’s Sentiments Report showing 6% buy position and 94% sell volume. The total transaction volume index stood at 1.30points, just as impetus behind the day’s performance was weak as Money Flow Index is looking down at 22.20pts, from the previous day’s 36.99pts, indicating that funds left the market.
For you to successfully invest and trade in this volatile market, order for Investdata’s video on Buy & Sell Technical Analysis Toolbox to navigate the volatile market profitably, enhance trading decisions and boost your bottom line. Also, to up your game in stock trading and investing, understanding the key to trading price and index action will go a long way to make the difference in your trading results, check out the video materials below.
Index and Market Caps
At the end of Thursday trading, the NGX All-Share Index shed 206.87bps, closing at 48,964.83bps, after opening at 49,171.70bps, representing a 0.42% up, just as market capitalization fell by N120bn, closing at N26.43tr, from the previous day’s N26.53tr, which also represented a 0.42% depreciation in value.
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Meanwhile, Thursday downturn was driven by selloffs in the shares of Nestle, UCap, Fidson, Cadbury, GTCO, Accesscorp, Africa Prudential and AIICO among others, which impacted negatively on Year-To-Date gain, reducing it to 14.63%. Market capitalization gain YTD also rose to N2.79tr YTD, representing a 19.65% rise over the opening level for the year.
Bearish Sector Indices
Sectorial performance indexes were in red, led by the NGX Consumer Goods which shed 3.22%, followed by Insurance, Banking and Energy with 0.58%, 0.15% and 0.03% respectively. while NGX Industrial goods closed flat.
Market breadth remained negative, as losers outpaced gainers in the ratio of 24:12; just as activities in volume and value were up, with players trading 220.78.m shares worth N2.25bn. Volume was driven by trades in Jaiz Bank, Zenith Bank, Veritas Kapiat Insurance, Stanbic IBTC, and GTCO.
Jaiz Bank and Ikeja Hotel were the best-performing stocks, gaining 9.20% and 8.80% respectively, closing at N0.83 and N1.24 per share respectively on market forces. On the flip side, Nestle Nigeria and Africa Prudential lost 10% and 8.3% respectively, closing at N1,215 and N5.00 per share, purely on selloffs and market forces.
We expect a mixed sentiment to continue on bargain hunting as reactions to rate hike last, in the midst of quarter-end window dressing by fund managers. This is just as banking stocks are gaining attention, despite profit taking that makes the sector more attractive for income investors, while portfolio rebalancing continues on bargain hunting in the midst of the worsening sovereign risks.
We note also the flow of funds into the fixed income segment on the rate hike by the CBN, as sector rotation persists. Analysts are also focused on the lookout for August CPI and flow of funds amid oil prices oscillation.
INVESTDATA Q4 MASTER CLASS
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- Mastering Contemporary Technical Tools For Wealth Building In Uncertain Environment, Mr Abdul-Rasheed Momoh, Head Capital Market, Trw Stockbrokers Ltd
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CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605