Market Update for the Week Ended Sept 3 and Outlook for September 06-10
The beginning of the new month brought rekindled buying interests on the Nigerian Exchange, with mixed sentiments, amidst position-taking in interim dividend-paying banking stocks, industrial Goods, and medium cap companies. Also, the All-Share index’s action suffered losses within the period due to selloffs from the recent rally witnessed in the previous month.
The week under review, incidentally had the last two days in the last two days of August and the beginning of September and had three mixed sessions of pullbacks and two of rebounds that reflected the changing sentiment or psychology of market players. The month of September in recent years has been kind to investors, given what has come to be known as the September Effect. The market has been mixed but has been positive in recent years as revealed by Investdata 10-year historical data. This has added a level of uncertainty in the economy and in the market.
However, the market remains the place to be, since results from the half-year earnings season beat expectations and many companies grew their revenue, while investors await the results of other interim dividend-paying stocks. Zenith Bank retained its 30 kobo payout, and Access Bank grew its payout from 25 kobo to 30 kobo for the half-year period. This means several things to investors, but for income investors these are always good stocks to buy despite the low liquidity and profit-taking from medium and low cap stocks that rallied in August, followed by the early positioning in September. Both months are very dicey and mixed in outlook, but August closed positive, defying historical trends due to the change in the trading environment.
This also is likely to influence September depending on news, events, government policy, and market conditions in the new month. In the first full trading week of September, we expect mixed trends as investors continue to digest the results of first-tier banks that were released recently in expectation of more as the CBN approves other results.
In recent years’ historical data has revealed that September is a position-taking period that lasts throughout the ember months and year-end due to seasonality associated with year-end. This is time to target sectors that drove the GDP growth while buying value and growth stocks with high upside potential.
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Movement Of NGXASI
The NGX index’s action traded mixed for the period under review with three sessions of down markets and two up amidst improved buying sentiments that failed to reverse the bear dominance. The market finally closed lower on a high traded volume and negative breadth.
The week’s trading opened on a negative note, after shedding 0.70%, which was extended to Tuesday and midweek when the index dropped by 0.27% and 0.17% respectively on selloffs and profit booking. The trend changed by Thursday and Friday on rekindling demand for banking stocks and others as the composite index inched up by 0.07% and 0.02% respectively, resulting in a cumulative 0.57% loss for the week, compared to the previous week’s 0.01% gain.
During the period, the key performance index lost a cumulative 224.64 basis points, closing at 39,261.09bps from its opening level of 39,485.65bps, after touching an intra-week low of 39,170.92bps from its highs of 39,534.81bps on mixed sentiments, profit-taking in medium and low cap stocks. Also, market capitalization fell by N117.04bn, closing at N20.46tr, compared to the previous week’s N20.57tr, which also represented a 0.57% value loss.
During the week the share price of University Press was adjusted for the dividends of five kobo recommended by the directors.
Low-priced stocks dominated the advancers’ table for the week, as players positioned in Transcorp Hotel, Skyway Aviation, Presco, Cornerstone Insurance, AIICO Insurance, and Prestige Assurance, among others, due to the continued repositioning of portfolios as the market oscillated and changed the trading environment. Price actions revealed the presence of sellers in the market, a situation that reflected on the sectorial indexes
Market breadth for the period was negative despite the seeming rebound on high traded volume to signal position-taking and accumulation phases, as the losers’ outnumbered gainers in the ratio of 35:26, on a mixed sentiment showing 25% ‘buy volume and 75% sell position. Money Flow Index dropped slightly to 71.87bps from the previous week’s 73.50 points, an indication that funds left the market.
NSEASI WEEKLY CHART MOVEMENT
From the above chart, and judging by the NGX index’s action, the market is still oscillating within a consolidating rectangle as it pulls back after forming a double top chart pattern on a weekly time frame, with the candlestick formation indicating weakness and selloffs among traders, but we need to watch out for a reversal in the new week as all eyes are on the remaining financials of interim dividend-paying stocks and the expected economic data that should further support market fundamentals to attract liquidity. Already, the daily chart has signaled a reversal is underway.
Bearish Sectoral Indices
All the sectorial performance indexes were down during the week, except for the NGX Insurance that closed 0.79% higher, while the NGX Oil/Gas led the decliners after shedding 2.96%, followed by Consumer Goods, Industrial Goods and Banking with 01.34%, 0.89%, and 0.58% respectively. Transactions in volume and value terms were up, with investors exchanging 1.34bn shares worth N8.65bn, compared to the previous week’s 1.03bn units valued at N8.18bn. The week’s volume was driven by Financial Services, Conglomerates, and Consumer Goods, particularly Transcorp, Honeywell Flour Mills, Access Bank, Zenith Bank, and GTCO.
Transcorp Hotel and Skyway Aviation were the best performing stocks for the week were after gaining 10% and 9.46% respectively, closing at N5.17 and N4.05 per share respectively on market sentiments and forces. On the flip side, Oando and Mutual Benefits Assurance lost 15.21% and 12.50% respectively, at N4.07 and N0.28 per share, purely on profit-taking and market forces
Outlook for the week
We expect a mixed trend as investors and traders look to results of the remaining first-tier banks, while many stocks enter their buy range to attract funds into the equity space, just as institutional and other investors digest the Q2 GDP growth ahead of the August inflation report and the MPC meeting slated for September 20 and 21, 2021, as well as the continued repositioning of portfolios for the year last quarter. Also, investors are still observing the interplay of forces in the FX market as the CBN gives a guideline for the new digital currency platform. The week’s high volume suggests that institutional investors and others are still in the market looking at the numbers. It is noteworthy that oil prices rebounded in the international market; corporate actions, as well as the interim dividend possibilities, are around the corner.
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