Market Update for September 4
The bullish momentum on the Nigerian Exchange continued as the first full trading week of the September started on a positive note, extending the previous month’s and week’s bull-run to sustain the third sessions of back-to-back gains on a very high traded volume and positive market breadth, signaling the gradual return of smart money to the market.
A ten years’ historical data on the NGX performance in the month September, according to Investdata research, revealed an up market for seven years and was down for three years to give investors an insight into what the month looks like. We acknowledge that the prevailing economic situation and trading environment are changing due to the ongoing government reforms and improved market fundamentals.
The strong buying interests and positive sentiments witnessed on the exchange at the end of Monday’s trading was attributed to impressive performance of the banking sector that had been the most consistent in dividend payment. This is justified in the recent growth in interim dividend payout from Fidelity Bank and GTCO, which has further given insight into what investors should expect from the likes of Zenith Bank, UBA and Accesscorp, while all eyes are still on AXA Mansard and Consolidated Hallmark Insurance Plc on interim announcement any moment from now.
Also, despite the increasing demand for consumer and industrial goods in the market, players should trade with caution while positioning, but target companies in the services industry with strong fundamentals and earnings power that will support price and higher dividend payment at the end of the year. These are against the backdrop of the changing market conditions and trading environment due to macroeconomic headwinds, mixed corporate earnings and the prevailing yield in alternative market with rates and yields outlook remaining mixed due to rising inflation, high interest rate and exchange rate problem as a result of the high volatility in the exchange.
The NGX All-Share index again broken another psychological line of 68,000 basis points heading to 1984’s 70,000bps mark on improved transactions in volume and buying interest. The candlestick formation at the end of trading signaled a bullish pattern as 2008 resistance support to reveal a markup phase that need to be confirmed as the market opens on today. Also, the market continues to interpret and digest the latest news of Oando’s acquisition of the entire shareholding of Agip’s assets and PZ delisting notification in the face of expected full-year audited financial s for May 30, 2023.
This is the time to buy into value stocks with strong fundamentals, as the market looks forward to a favourable news that will support this buying interest that resurfaced. Also noteworthy is the mixed outlook in the fixed income market yields and rates, amidst portfolio repositioning and sector rotation on the strength of company earnings’ power.
The NGX index’s action is currently trading above the 68,000 basis points, ‘T line’ and 200-day moving average, attracting bargain hunters to position in fundamentally sound medium and low cap stocks amidst digesting of scorecards of many companies and prevailing macroeconomic factors including exchange rates, yield in money market and Q2 GDP. It is therefore time to use technical tools, if you have been ignoring charts and fighting the trends, it is your chance to step up your game. It is pertinent to stress the fact that profit taking is part of market dynamics, which can occur at any time, as we look forward to a mixed outing and intermittent profit taking, since policy factors that pushed the market up are shaking, as market wait for favorable news and statements from the minsters.
To navigate the rest of the quarter and year profitably using fundamental and technical analysis, join investdata’s 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 selloffs. Despite the mixed volume pattern witnessed in recent days, it is time to shop for undervalued stocks, sector rotation, go for defensive stocks at the next insider playing opportunity.
Oil price oscillation continued, as it slides to trade at $88.61 per barrel in the midst of oil production hitting record high and weak global demand as Chinses weak economic dampen sentiments. 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.
Monday’s trading opened in the green and it was sustained, despite oscillating throughout the session on position taking and buying interests in blue chip stocks and others. This situation pushed the Index to an intraday high of 68,302.55bps from its lows of 67,568.03bps, before closing above the opening figure at 68,279.14bps.
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 sentiment as revealed by Investdata’s Sentiments Report showing 97% buy position and 3% sell volume. The total transaction volume index stood at 1.71 points, just as the momentum behind the day’s performance was strong, with Money Flow Index reading 74.63pts, from the previous day’s 67.64pts, indicating that funds entered the market.
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Index and Market Caps
The benchmark NGXASI, at the close of the day trading gained 751.95bps, closing at 68,279.14bps, from its 67,527.19bps opening level, representing a 1.11% growth. Market capitalization also rose by N412bn to N37.40tr, from the previous day’s N36.96tr, which also represented a 1.11% appreciation in value.
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Meanwhile, the day’s upturn was driven by position taking in the shares of Dangote Sugar, Nascon, Transcorp, GTCO, Zenith Bank, Accesscorp, Guinness, FBNH and Oando, among others. This impacted positively on Year-To-Date growth, which increased to 33.22%, while Market Capitalization YTD gain stood at N8.32tr, representing a 34.86% rise above its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, as the NGX Banking and Consumer goods closed higher by 5.65% and 1.57% respectively, while the NGX Insurance led the decliners after losing 2.81%, followed by Industrial goods with 0.14%. Just as NGX Energy closed flat.
Market breadth was positive as gainers outpaced losers in the ratio of 39:19, while activities in volume and value were up after market players exchanged 845.68m shares worth N13.04bn, driven by trades in Fidelity Bank, Zenith Bank, UBA, Transcorp and GTCO.
Dangote Sugar and Nascon were the best performing stocks, gaining 10% and 9.98% respectively, closing at N66.55 and N61.15 per share each, on market forces and merger consideration. On the flip side, CHI Plc and Cornerstone Insurance lost 9.57% and 9.29% respectively, closing at N1.04 and N1.27 per share, purely on the back of profit taking.
We expect mixed sentiment and positive momentum to continue ahead of UBA, Accesscorp and Zenith Bank earnings reports in the midst of bargain hunting and mixed outlook for money market yields ahead of midweek TB primary market auction and sector rotation persists.
However, pullbacks are creating buying opportunities amidst the economic reforms of the government, just as more policy pronouncements and economic managers hit the ground running, a situation expected to offer investment direction eventually.
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, while also looking at the trends and events across the globe and domestically.
CRO|Investdata Consulting Ltd
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