Market Update for September 8
The bull resurfaced on the Nigerian Exchange Thursday, halting three consecutive sessions of negative outing on improved buying sentiment and momentum as the benchmark NGX All-Share Index closed higher on a low traded volume and positive market breadth. Position taking across the major sectors inched up, especially in the financial stocks and others, propelled by the impressive numbers emanating from the banking sector, with interim dividend corporate actions that triggered buying interest from income and dividend investors. This is not unexpected, given that this sector is the most consistent in dividend payment in the history of the exchange.
On Thursday also, United Bank for Africa Plc released its half-year audited to the market in line with its projection, with impressive numbers, with gross earnings growing by more than 18% to N372.36bn, compared to previous half-year’s N316.04bn, just as profit after tax inched up 16% from N60.58bn in 2021 to N70.33bn. The net earnings translated to N1.98 Earnings Per Share, against N1.69 in 2021, with the board offering an interim dividend of 20 kobo per share. Investors reacted as the share price inched up slightly on the release of the result during the session.
The oscillation trend in the market is attributed to the historical case for the September effect, depending on the period analysis and what is happening. It is generally believed that retail investors liquidate their portfolios, going into the month to offset school fees for the children and other seasonal expectations, like the August inflation report, the outcome of the forthcoming Monetary Policy Committee meeting. Others include the fear of global economic recession and pre-election year tension, ahead of Q3 earnings reporting season in October. Also, the market continues its oscillation of making lower lows and lower highs to create buy opportunities for discerning investors as revealed by price action, volume and momentum.
Midweek’s bullish hammer reversal pattern was confirmed at the end of Thursday’s trading, but a continuation of this trend should be confirmed as trading opens Friday, given the NGX index action’s reversal on a low traded volume amidst positive market breadth and buying sentiment as index trades below the T line, ahead of the above mentioned events in the month. My answer regarding what to do under the current phase or market mood, whether regarding an individual stocks or an index, especially when to buy or sell, is always based on price actions and the money flow direction. 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.
The contemporary technical analysis that works in the changing volatile market, is what you should adopt. 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.
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Oil prices rebounded after pulling back to trade below $90 pre Ukraine war prices on Russia threatening to halt supply in the midst of weak demand as a result of impending recession and tight supply worries that may keep the price oscillating below $100, despite OPEC cutting output in the face of G7 capping Russia oil as energy crisis continue in Eurozone in the midst of aggressive interest rate actions by central banks across the globe droving bearish sentiment. Despite the bailout package of china’s government to simulate economic activates and stable employment and that of Germany package to manage energy crisis.
Thursday’s trading opened slightly on the downside and oscillated and rebounded by afternoon on position taking in blue-chips stocks, a situation that pushed the NGX’s index to an intraday high of 49,658.07bps from its lows of 49,577.38ps, before closing slightly above its opening figure at 49,652.25bps.
Market technicals were positive and strong, with higher volume of shares traded than the previous day in the midst of breadth favoring the bulls on buying sentiment as revealed by Investdata’s Sentiments Report showing 93% buy volume and 7% sell position. The total transaction volume index stood at 0.88points, just as impetus behind the day’s performance was relatively strong as Money Flow Index is looking flat at 53.39pts, from the previous day’s 53.99pts, indicating that funds left the market, despite closing in the green.
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Index and Market Caps
At the end of Thursday’s trading, the NGX All-Share index gained 11.08bps, closing at 49,652.25bps, after opening at 49,599.73bps, representing a 0.11% up, just as market capitalization rose by N28.33bn, closing at N26.78tr, from the previous day’s N26.75tr, which also represented a 0.11% appreciation in value.
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Meanwhile, Thursday’s upturn was driven by position taking in Union Bank of Nigeria, FCMB Holdings, Ardova, Etranzact, Cutix, UBA, Fidelity Bank, United Capital, FTNcocoa and Cornerstone Insurance among others, which impacted mildly on Year-To-Date gain, which increased to 16.24%. Market capitalization gain YTD also rose to N3.23tr YTD, representing a 20.11% rise over the opening level for the year.
Bullish Sector Indices
The sectorial indexes were up except for the NGX Consumer Goods that closed 0.15% lower, while the NGX Banking index led the advancers after gaining 1.07%, followed by Insurance, Energy and Industrial goods with 0.75%, 0.37% and 0.16% respectively.
Market breadth remained positive, as gainers outnumbered losers in the ratio of 22:9; just as activities in volume and value were mixed, after investors exchanged 161.88m shares worth N1.63bn, with volume driven by trades in Transcorp, Fidelity Bank, Sterling Bank, FCMB and UBA
Etranszact and Ardova were the best-performing stocks, after gaining 9.81% and 8.94% respectively, closing at N9.00 and N1.60per share respectively on market forces. On the flip side, Vitafoam and Multiverse lost 9.96% and 9.92% respectively, closing at N21.25 and N2.36 per share, purely on profit taking.
Being the last trading day of the week, we expect a mixed trend, as all eyes are on Accesscorp’s result and next week’s expected release of the inflation report for the month of August, while portfolio rebalancing continues on bargain hunting. Also, investors continue to analyse the numbers released by UBA, 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.
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