NGXASI Hits 21% YTD Gain, As Bullish Sentiment Linger On Buying Interest, Fiscal Reforms

Market Update for July 3
The positive sentiments and portfolio realignments ahead of the coming earnings reporting season continued on the Nigerian Exchange Monday, ushering in trading for the second half of the year on a bullish note, thereby extending four successive sessions of bull transition on a very high traded volume and positive breath.
Trading for the month of July therefore started on a positive note, being a very dicey having been associated on the NGX with mixed trends and sentiment over the years.
Historic data reveals that in the past five years trading for the month has closed 60% in the red, and green in just two years of 2020 and 2021, despite being a Q2 earnings season month. However, with the changing market dynamics and trading environment, we look forward to a positive outing and intermittent profit taking, since factors that kept the market on its uptrend remain unchanged. It is noteworthy also that the earnings reporting season will reveal the state of corporate earnings and others, which would expectedly be a game changer, as we go into the new month. Also, all eyes are on the appointment of economic managers and minsters by the new government.
The index has broken another psychological line of 61,000 basis points and is heading to the 62,000 mark on an increased buying sentiment, trading at its 16-year market high on a high traded volume of transaction. In the process, many stocks have continued to hit new 52-week highs on inflow of fund and an expected fall in interest rates as the government looks to reform monetary policy after the recent unification the foreign exchange rates that made equity prices cheaper and more attractive on the exchange for foreign investors.
All the major sectors of the market witnessed buying interests on the inflow of funds as investors and traders took position in low, medium and high cap stocks, even as many company’s dividend yield become lower yet, ahead of the Q2 earnings reporting season. This was as more quoted companies notified the exchange and investors of insider dealings, their closed periods and board meeting dates to approve the half-year financials.
The NGX is currently trading above its T-line, 100-Day Simple Moving Average and 200DMA on the daily and weekly chart, as more stocks are making new highs on the positive sentiment towards government economic and financial market reforms. This calls for a change in trading strategies and caution, amid the possibility of profit taking and correction. As such, technical traders and discerning investors must be guided, because higher prices will lead to lower dividend yields, even when market Price to Earnings Ratio is relatively low. It however provides better opportunities for investors to hedge against inflation even when fixed income market yields look attractive and remain mixed in the face of high inflation.
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Meanwhile, oil price oscillation continued as it rebounded, trading at $75 per barrel in the midst of China Stockpiling and UK manufacturing facing mire headwinds. Just as the fear of global recession on continued rate hike and mixed macroeconomic data from US, China, Germany and others had been a concern for market players. Even as the Russia-Ukraine war remain a 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 on the upside and was sustained throughout the session, on buying interests across sectors and highly priced stocks a situation that pushed the NGX All-Share Index to an intraday high of 61,968.27bps, from its lows of 60,991.12ps, before closing sharply above it opening figure at 61.949.24 point.
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 99% buy position and 1% sell volume. The total transaction volume index stood at 1.85 points, just as energy behind the day’s performance was strong, with Money Flow Index reads 89.39pts, from the previous day’s 84.10pts, indicating that funds entered the market.
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Index and Market Caps
Monday’s trading ended with the benchmark NGX All-Share Index gaining 980.97bps, and closing at 61,949.24bps, from its 60,968.27bps opening level, representing a 1.61% growth. Market capitalization rose by N534bn at N33.73tr, from the previous day’s N33.20tr, which also represented a 1.61% appreciation in value.

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Meanwhile, Monday’s upturn was driven by accumulation in the shares of MTNN, Stanbic IBTC, Zenith Bank, GTCO, UBA, Accesscorp, Ikeja Hotel, PZ, Lafarge Africa, Dangote Sugar and Eterna, among others. This impacted positively on Year-To-Date gain, which increased to 20.9%, while Market Capitalization YTD gain went up to N6.10tr, representing 20.87% above its opening level for the year.

Bullish Sector Indices
Sectoral performance indexes closed in green, led by the NGX Banking index, which gained 6.8%, followed by Insurance, Oil/Gas, Consumer and Industrial goods with 1.8%, 1.5%, 0.5% and 0.04% respectively.
Market breadth was positive as gainers outpaced losers in the ratio of 67:14, while activities in volume and value were mixed after investors exchanged 1.2billion shares worth N14.10bn, driven by trades in, FCMB, UBA, Accesscorp, Jaiz Bank and Transcorp.
Eterna and University Press were the best performing stocks, gaining 10% each, closing at N23.10 and N2.75 per share respectively, on positive market forces and bullish run. On the flip side, Tripple Gee and Cornerstone Insurance lost 9.9% and 9.1% respectively, closing at N3.38 and N1.00per share, purely on profit taking.

Market Outlook
We expect the bullish sentiment to continue, as NGX recorded 20% above to confirm the bullish status of the market on improved investors buying interest and market supportive reforms of the government, just as more policy pronouncements and appointments would offer investment direction. Also, Q2 earnings reporting season draws closer to confirm the real state of the company performance and attract liquidity in the midst of markdown dates and the release of more march year end audited accounts.
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. Also looking at the trends and events across the globe and domestically.

Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605