Mixed Trend, As Investors Position On Market Pullback, Ahead Of Quarter-end
Market Update September 20
Trading activities on the Nigerian bourse started the week on a mixed and volatile session with the composite NGX All-Share index closing lower on a low traded volume and amid negative sentiments to reverse gains of the previous session. It thereby extended the sideways movement ahead of the end of the month and quarter window dressing, as players continue to digest the positive macroeconomic data and impact of the Monetary Policy Committee decision, which are likely to determine an uptrend or downtrend from this level of a breakout or fake-out.
In line with our expectations, members of the Monetary Policy Committee, at the end of their regular bi-monthly meeting on Friday, unanimously voted to keep the benchmark Monetary Policy Rate at 11.5%, besides also voting to retain other the policy instruments unchanged. We believe that the Liquidity Ratio and Cash Reserve Ratio, at the current levels need close monitoring.
Technically, the market activity levels remain weak in recent days on a sell volume driven by local institutional investors and portfolio repositioning across all classes of stocks, especially the bellwether equities and dividend-paying stocks that have been the major drivers.
Meanwhile, Monday’s trading opened slightly on the upside before oscillating mildly between the mid-morning to the afternoon on profit-taking and selloffs among the major sectors and buying interests in medium and low-priced stocks. This situation pushed the NGX index to an intraday low of 38,900.92 basis points, from its highs of 38,961.46bps, after which it closed below the opening figure at 38,906.42bps.
Market technicals were weak and mixed as the volume traded was higher than that of the previous day in the midst of flat breadth on selling sentiment as revealed by Investdata’s Sentiment Report, showing 9% ‘buy’ volume and 91% sell position. Total transaction volume index stood at 0.80 points, just as the momentum behind the day’s performance was relatively weak, with Money Flow Index looking down at 25.92points, which was however better than the previous day’s 18.85points, an indication that some funds entered the market, despite the down market.
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Index and Market Caps
At the end of Monday’s trading, the NGXASI slipped by 37.45 basis points, closing at 38,906.42bps, from its opening level of 38,943.87bps, representing a 0.10% drop, just as market capitalization fell by N19.35bn, closing at N20.27tr, from the opening value of N20.29tr, also represented 0.10% deprecation in value.
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The day’s downturn was driven by selloffs in Unilever, PZ Cussons, Zenith Bank, and GTCO, among others. These impacted mildly on Year-To-Date loss, which increased to 3.39%, just as the cumulative loss in market capitalization stood at N786.25bn, representing a 3.73% decline from the year’s opening value.
Mixed Sector Indices
Performance indexes across the sectors were mixed, as the NGX Industrial Goods and Energy closed 0.13% and 0.08% higher respectively, while the NGX Insurance Index led the decliners after losing 0.78%, followed by Banking and Consumer Goods with 0.27% and 0.16% respectively.
Market breadth was at par, as losers were equal to gainers in the ratio of 19:19, while transactions in volume and value terms were up after investors traded 190.96m shares worth N2.35bn, compared to the previous day’s 155.1m units valued at N1.95bn. The day’s volume was driven by trades in Ekocorp, UBA, Transcorp, Sovereign Trust Insurance, and Fidelity Bank.
Consolidated Hallmark Insurance and Chams were the best-performing after gaining 9.62% and 9.52% and closing at N0.57 and N0.23 per share respectively on market forces. On the flip side, SCOA and Veritas Assurance lost 9.43% and 8.70% respectively, closing at N0.96 and N0.21 per share, purely on selloffs.
We expect the mixed trend to continue as investors and traders utilize the market’s pullbacks to position, while many stocks are trading within their buy ranges, a situation expected to attract funds into the equity space, given the Dividend Yield capable of serving as a hedge against inflation. Also, institutional investors and others continue to digest recently release economic data ahead of the month and quarter-end, as well as the continued repositioning of portfolios for the year’s 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 day’s low volume suggests that institutional investors and others are still cautiously looking at the economic data and policy direction of the economic managers. It is noteworthy that oil price pullback in the international market; corporate actions, as well as the interim dividend possibilities, are around the corner.
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