Market Update for July 24
Trading activities on the Nigerian Exchange started the week on a positive note, with the benchmark All-Share index closing higher on an above average traded volume and a flat market breadth, thereby extending the bull transition for a third straight trading session. There was mixed volume chart pattern that sustained a bullish divergence by the MACD and other momentum indicators.
The strong positive movement continued, despite the seeming mixed performance witnessed during trading session as profit taking hit some banking stocks in the face of portfolio repositioning, changing economic fundamentals and concerns. Already, all eyes are on the outcome of the Central Bank of Nigeria Monetary Policy Committee on Tuesday, just as more corporate earnings reports are expected to hit the market this week as the statutory deadline for submission draws closer. Market players are also betting on the expected half year results of high profile companies.
During and after Tuesday’s session, Unilever Plc released its half-year earnings reports which was positive and mixed, looking at the last three months’ performance, with revenue and bottom line rising by 23.74% and 44.5% respectively, in the midst of this gloomy economic condition for the manufacturing sector. This translated to an EPS of 48 kobo against 33 kobo posted in 2022. Also, Tripple Gee made available its Q1 earnings report after the market had closed, with mixed numbers that were below market expectation. Turnover stood at N666.46m, from N467.37m in 2022, representing a growth of 43%, while profitability level slipped by 5% to N2.26m, from N2.39m in 2022. This also produced earnings per share of 4 kobo compared 5 kobo.
The buying pressure had supported the flow of funds into the equity space as a sign that the bulls are in charge on the exchange. We need to confirm this when the market opens Tuesday, as the benchmark index’s inched up on a strong buying pattern and high traded volume. That is expected to support a continuation of trend, or pullback.
More half year earnings reports are expected to drive increased volatility, especially rotation and portfolio reshuffling in value-oriented sectors. This is against the backdrop of an environment where reform policies are driving hyperinflationary pressure in the face of an already heated economy and headwinds ranging from rising inflation, high interest rate regime and insecurity, among others.
The NGX closed higher on Monday, thereby extending the markup phase on buying sentiment, in the midst of profit taking in some banking and others stocks. Investors should know that profit taking is part of market dynamics. This is despite the changing market structure as a result of gradual return of foreign portfolio investors and trading environment, we look forward to a mixed outing and intermittent profit taking, since factors that pushed the market to this level remain unchanged so far.
We also note that the earnings reporting season will reveal the state of corporate earnings power and others, which would expectedly be the game changer as we go into the quarter. Already, all eyes are on the expected appointment of economic managers and minsters by this new government, a situation that will determine their rating of the new administration.
The major sectors of the market witnessed a bullish performance on increased position taking and buying interests among low, medium and high cap stocks, especially in the industrial, insurance, consumer goods and others. This was as more quoted companies notified the exchange and investors of insider dealings, their closed periods and board meeting dates to approve the half-year financials. NGXGroup informed the market of it possbl3 interim dividend
The NGX index’s action still trades above the T-line, 50-Day Simple Moving Average and 100DMA on the daily and weekly chart in the midst of government economic and financial market reforms. This calls for a change in trading strategies and buying into value companies, amid the possibility of profit taking and correction any time. As such, technical traders and discerning investors must be guided, because higher prices will lead to lower dividend yields, even when market 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.
To navigate the rest of the quarter and year 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 bull-run. Despite the mixed volume pattern witnessed recent days, it is time to go shopping for undervalued stocks, sector rotation, go for defensive stocks and the next insider playing opportunity,
Oil price oscillation continued, as it rebounded to trade at $82.74.per barrel in the midst of expected output cut and fed, expected rate hike, despite the seeming inflation cooling gradually across many economies. 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, Monday’s trading opened slightly in the downside. This was sustained till midday, when it rebounded by afternoon on buying interests in blue chip stocks and others that pushed the Index to an intraday high of 65,268.28bps, from its lows of 64.892.11bps, before closing above it opening points at 65,268.28bps.
Market technicals were positive and strong with a higher volume traded when compared to the previous session in the midst of breadth favoring the bulls on a buying pressure as revealed by Investdata Sentiments Report showing 100% buy position and 0% sell volume. The total transaction volume index stood at 0.80 points, just as impetus behind the day’s performance was strong, with Money Flow Index reads 85.47pts, from the previous day’s 79.68pts, indicating that funds entered the market.
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Index and Market Caps
The key performance NGX All-Share Index, at the close of Monday gained 264.89 basis points, closing at 65,268.28bps, from its 65,003.39bps opening level, representing a 0.41% rise. Market capitalization also rose by N145.12bn to N35.54tr, from the previous day’s N35.39tr, which also represented a 0.41% appreciation in value.
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Monday’s upturn was driven by position taking in shares of Stanbic IBTC, FBNH, Wapco, Dangote Sugar, CHI Plc, Nascon, and Linkage Assurance, among others. This impacted positively on Year-To-Date growth, flat it to 27.35%, while Market Capitalization YTD gain increased to N7.68tr, representing 27.31% above its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, as the NGX Banking closed lower by 0.83%, while NGX Insurance led the advancers after gaining 0.23%, followed by Consumer and Industrial goods with 0.03% and 0.02% respectively. The NGX Energy was flat.
Market breadth was at par as gainers were equal losers in the ratio of 32:32, while transactions in volume and value were mixed after investors exchanged 831.39m shares worth N12.94bn, driven by trades in FBNH, UBA, GTCO, Fidelity Bank and Japaul Gold.
National Allied plc and GSK were the best performing stocks, gaining 10% each, closing at N31.90 and N8.25 per share respectively, on positive market forces and sentiment. On the flip side, Ikeja Hotel and Multiverse lost 10% and 9.97%, closing at N2.70 and N3.34per share, purely on profit taking and selloffs.
We expect mixed sentiments to continue as market reacts to more earnings released, bargain hunting and policy meeting outcome in the midst of profit taking, economic concerns and portfolio repositioning amidst supportive reforms of the government, just as more policy pronouncements and appointments would offer investment direction.
Also, more Q2 earnings reports are expected to confirm the real state of the company performance and attract liquidity in the midst of markdown dates and the release of remaining audited accounts.
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. Also looking at the trends and events across the globe and domestically.
CRO|Investdata Consulting Ltd
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