Market Update for June 26
Midweek’s trading on the Nigerian Exchange witnessed a positive outing, halting the bearish pattern and three consecutive sessions of bear-run on a low traded volume and positive market breadth, ahead of the second quarter-end window dressing by fund managers and market operators. The month of June is a weak one to watch historically as it ushers in first half year earnings reporting season. The benchmark NGX All-Share index rebounded after forming a double bottom on a less than average traded volume to signal accumulation phase that needs confirmation as trading opens on Thursday.
The changing market structure on the NGX continued, as bargain hunters take advantage of the recent pullbacks and correction to buy into value in the face of ongoing portfolio repositioning ahead of Q2 numbers that will usher in the second half of the year, which is expected to be dominated by primary market activities of banks and other companies raising funds to recapitalized their operations and businesses. For now, all eyes are on the forthcoming earnings reporting season and interim dividends from the banking sector and few other companies.
The NGX index’s action remains below the T-line to trade flat on 50-EMA and 50-SMA in the midst of the two moving averages crossing each other to signal weakness and changing market momentum and direction. Also, market players are looking forward to economic data and corporate earnings to reveal the state of economy and companies. Although, we see fiscal and monetary policies trying to return the nation’s economy to the path of recovery, despite the continued mismatch of policies and implementation style as oscillating oil production output persist in the midst exchange market challenges.
Ahead of the half-year earnings season, more companies like Ucap, Accesscorp, MTNN and UACN have informed the market of their closed period and board meetings to approve the second quarter earnings report, in the face of more Annual General Meetings notifications, just as some other companies presented resolutions from their meetings. The latest were from MRS Oil Nigeria, among others, while Airtel Africa updated the market of its ongoing share buyback. SterlingNG, Ucap and FBNH informed the market of yet another insider dealing in its shares. In the midst of all these, it is safe for investors to target companies with consistent track records of dividend payment, strong fundamentals and growth prospects that will support further growth in earnings which price feeds on in any market cycle.
Technically, the market signaled reversal as revealed by candlestick formation and momentum indicators. As ADX inched down at 18.52, while RSI and Money Flow Index are up to read 51.45 and 59.54 points against the previous session 48.83 and 55.99points respectively. Market players should watch this current trend and trade wisely as reversal is underway in the face of funds entered the market on positioning and profit taking. Also, trading volume pattern continued to oscillates, suggesting selloffs and buying interest in some sectors in the midst of wait and see attitude ahead of end of the quarter window dressing.
To navigate the rest of the quarter and beyond profitably using fundamental and technical analysis to run, join investdata live sessions at noon every Monday, Wednesday and Friday 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 range market. Despite the oscillating volume of transaction witnessed in recent time, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.
Oil prices at midweek closed lower, as it continues its oscillation to trade at $85.21 per barrel in the midst of uptick in US inventories and weak outlook for global demand. As mixed economic data and rate cuts by Fed continue to go front and back. Just as increasing geopolitical tension threats many economies even with the expect impact of rate cuts on the economic activities in the face of sticky inflation. This trend may likely continue in 2024, this up and down movement that drive volatility. As Middle East conflict and war in Ukraine continue to influence oil supply and demand.
Meanwhile, trading for the session opened in the green and it was sustained for the rest of the session, despite oscillating on buying interests and profit taking across the major sectors of the market, a situation that pushed the NGX’s index to an intra-day high of 99,394.12bps from its lows of 99,167.68bps, before closing above its opening level at 99,385.44bps.
Market technicals for the session were positive and mixed with lower volume 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 74% buy position and 26% sell volume. The total transaction volume index stood at 0.70 points, just as energy behind the day’s performance was relatively strong as Money Flow Index was up to read 59.54pts, from the previous day’s 55.99pts, indicating that funds entered the market.
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Index and Market Caps
The composite NGX All-Share Index at the close of Wednesday’s trading gained 167.84 basis points to close at 99,385.44bps after opening at 99,217.60bps, representing a 0.17% up. Market capitalization rose by N94.94bn, closing at N56.22tr from the previous day’s N56.13tr, which also represented a 0.17% appreciation in value.
Attention: If you have not signed up for INVESTDATA’s buy and sell signal setup, don’t delay, because the number of stocks entering their oversold range has increased as market correction and pullbacks call for caution and positive chart patterns to be on our watchlist. These stocks have potentials to retrace, considering their earnings prospects and the oscillating moves in an upmarket and weak economy.
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The upturn was driven by accumulation and buying interest in the shares of Oando, Zenith Bank, FBNH, UBA, Dangote Sugar, Unilever, Mansard, CWG and Veritas Kapital among others. This impacted mildly on Year-To-Date gain which inched up to 32.92%. Market capitalization YTD gain stood at N11.34tr, representing 37.35% above its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, as NGX Industrial goods and Energy index closed flat, while NGX Banking index led the advancers after gaining 0.76%, followed by Consumer goods and Insurance with 0.27% and 0.08% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 35:10, while activities in volume and value were down after players exchanged 276.36 million shares worth N4.12bn. Volume was driven by trades in Accesscorp, Aiico, GTCO, Fidelity Bank and Skyway Aviation .
Oando and CWG were the best performing stocks, gaining 10% each, closing at N13.75 and N6.60 per share respectively on market forces and sentiment. On the flip side, NSLTech and Cornerstone Insurance lost 10% and 8.64% respectively, closing at N0.54 and N2.01 per share, purely on profit taking and poor earnings reports.
Market Outlook
We expect mixed sentiments and trend to continue in the face of low valuation and portfolios repositioning, dividend investing and end of the quarter window dressing, while taking advantage of pullbacks to buy into value.
This is amid the volatility and pullbacks that add more strength to upside potential. As such, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.
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CRO|Investdata Consulting Ltd
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
08028164085
