Market Update for June 17
The nation’s equity market sustained it seeming bull transition on Thursday as the benchmark index closed positively, following the renewed buying interests in the financial and consumer goods stocks that extended the positive outing for the second successive session on a low traded volume and positive market breadth.
The positive sentiment and recovery move at this point shows that the market is heading somewhere, especially as all eyes are on March year-end accounts, and despite the oscillation on profit taking and selloffs. Investors should position wisely and ride with the trend as it is your friend until it changes.
To make a difference in your trading and investing in the second half of 2021, as the temperatures outside there is heating up with the changing markets and windows, even as the trading environment fuels volatility, especially considering the rising yields in fixed income. Other factors under consideration are the security challenges, high inflation, massive digital currency fluctuations, unstable exchange rates, mismatch in government policies, high unemployment rate and threats to freedom of expression. In all these, however, there are huge opportunities to be capitalized on, but we must warn of equally of major pitfalls that should be avoided.
That is why it’s so critical that you have the right knowledge, tools and strategies necessary to maneuver in the current market situation, and there is no better place to learn these necessities from me and other experts at the Q3 Master Class, Roadmap To Improved Trading Results and Enhanced Confidence that boost your bottom line.
Meanwhile, Thursday’s trading opened slightly on the upside, but oscillated throughout the session on positioning and profit taking that pushed the NGX index to an intraday high of 38,624.53 basis points from its lows of 38,570.721bps.
Market technicals were positive and mixed, as volume traded was lower than previous day’s in the midst of breadth favoring the bulls on buying sentiment, as revealed by Investdata’s Sentiments Report showing 82% ‘buy’ volume and 18% sell position. Total transaction volume index stood at 0.66 points, just as momentum behind the day’s performance was relatively strong, as seen in the 64.29pts Money Flow Index, compared to previous day’s 58.84pts, indicating that funds entered the market.
Index and Market Caps
At the end of session, the NGX All-Share index (NGXASI) gained 50.41bps to close at 38,615.11bps, from an opening level of 38,564.70bps, representing a 0.13% up, just as market capitalization rose N26.28bn, closing at N20.13tr, from its opening value of N20.1tr, also representing a 0.13% appreciation in value.
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The session’s uptrend was supported by buying interest in Guaranty Trust Bank, Zenith Bank, Nigerian Breweries, Vitafoam, UACN, UBA, Beger Paints, Champion Breweries, AIICO and Cornerstone Insurance, among others. This impacted mildly on Year-To-Date loss, reducing it to 4.11%, while the drop in market capitalization YTD amounted to N922.19bn, representing a 4.38% drop from its opening value for the year.
Mixed Sector Indices
Performance indexes across sectors were mixed, with the NGX Insurance, Banking and Consumer Goods closing 1.01%, 0.81% and 0.18% higher respectively, while the NGX Industrial goods shed 0.02%.
Market breadth closed positive, as advancers overwhelmed decliners in the ratio of 18:8; while activities in volume and value terms were down as investors exchanged 160.44m shares worth N1.4bn, compared to the previous day’s 302.72m units valued at N2.81bn. Volume was driven by trades in Wema Bank, Mutual Benefits Assurance, Zenith Bank, Sterling Bank and FBN Holdings.
Champion Breweries and Coronation Insurance were the best performing stocks for the day after gaining 10% and 9.43%, closing at N1.98 and N0.58 per share respectively on market forces and earnings expectation. On the flipside, Consolidated Hallmark Insurance and Unity Bank lost 8.96% and 3.51% respectively, closing at N0.61 and N0.55 per share, on profit taking.
Market Outlook
We see the rebound sustained as player’s digest the inflation data, high oil price and dividend possibilities in the midst of buyers dominating sellers in recent trading sessions, revealing the presence of bargain hunters taking advantage of the pullbacks to position for quarter-end window dressing, seeming positive economic data ahead of March, April and May full-year earnings reports. We note that half-year interim dividend stocks are becoming more attractive at this point for income investors and traders, even as the market anticipates positive news, while oil price continues to oscillate above $72pb to support global economic and stock market recovery across climates. We also expect the ongoing COVID-19 vaccination to support global and domestic economic recovery that will enhance the market and give direction.
The banking sector and others remain attractive on the back of the prevailing low prices, despite the Q1 mixed numbers.
Again, the way to go is: Target dividend-paying stocks and fundamentally sound companies with growth prospects in 2021, looking the way of mispriced equities ahead of interim dividend announcement. This is especially given that despite the seeming improvements, fixed income yield continues to offer negative real rate of return due to the galloping inflation.
However, the strong and faster recovery may continue, depending on market forces, going forward, as propelled by expected Q2 earnings reports, until the next MPC meeting in July.
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Sub-Topics
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Trading the equity market on minutes and day charts can be challenging, because things or events happen so fast. Volatility occurs first on the daily time frame, often with little or no warning.
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CRO|Investdata Consulting Ltd
ambrose.o@investdataonline.com
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