Outlook Remains Mixed On NGSE, As Investors Position Ahead Of Q3 Earnings Season

Market Update for September 24
Tuesday’s transactions on the Nigerian Stock Exchange maintained its volatile pattern as the composite All-Share index declined further, extending the negative sentiments for the second consecutive session amidst continued sell down and profit-taking ahead of quarter-end window dressing by fund managers and the onset of the Q3 earnings reporting season in October.
The seeming optimism and rekindled buying interest in the market seem to have disappeared in recent days as reflected in the massive selloffs witnessed in trading for the first two days of the week. It is not impossible that investors are reacting seemingly to the decision by the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) to hold rates, just as other developments in the political space internally and externally. Also, on Tuesday, the CBN published its Purchasing Managers’ Index, which showed a slowdown in the manufacturing sector in the month of September to 57.7 points, from 57.9 points in August. Also, unemployment continues to rise on a daily basis which is reflecting in the weak demand as purchasing power remained seriously low.
The current battle between the bears and bulls remains a blessing in disguise for discerning investors and traders that know how to profit from this current market conduction, given that the last quarter of the year is the most active, due to the festivities and other seasonal patterns that go with it.
It is, therefore, necessary to ensure you are prepared for the next big move of a bull market after this prolonged bear dominance because these up and down movements are the beauty of stock market any time.
Meanwhile, Tuesday’s trading activities started on the downside, and sustained that mood throughout the session as highly capitalized stocks suffered losses, pushing the NSE index down to an intraday low of 27,352.24 basis points, from a high of 27,635.68bps, just as trading closed on a low traded volume.
Market technicals for the day were negative and mixed as volume traded was higher than previous day’s in the midst of a negative market breadth and strong selling pressure as revealed by Investdata’s Daily Sentiment Report, which showed ‘sell’ position of 100%, while ‘buy’ volume stood at 0% on total daily transaction volume index of 0.69. The momentum behind the day’s performance maintained a relative strength, regardless of the down market as Money Flow Index read 53.85 points, from the previous session’s 52.24bps, indicating that funds entered some stocks. This, however, indicates that smart money is up to something and should be watched closely by discerning investors and traders. Traders need not panic, as Tuesday’s is yet another move to shake some people out position, while not also forget that timing is very important in stock trading and investing.

Index and Market Cap
At the end of Tuesday’s trading, the NSEASI lost 298.04bps, closing at 27,352.24bps from its 27,655.28bps opening level, which represented a 1.08% decline. Market capitalization shed N145.73bn, closing at N13.31tr, from an opening value of N13.46 trillion, which also represented a 1.08% loss position in investors’ portfolio. As mentioned earlier, the MACD and Money flow index remained bullish and positive respectively. The behaviour of market forces at midweek’s trading will, however, confirm the direction for the next action.
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The day’s decline was driven by sell-down and profit booking in stocks like Dangote Cement, MTN Nigeria, Guaranty Trust Bank, Zenith Bank, Access Bank, Flourmills, UBA, Stanbic IBTC, Dangote Sugar, 11 PLC, FBNH, among others. This impacted negatively on the NSE’s Year-to-Date loss, as it increased to 12.98%, even as YTD market capitalization gain dropped to N1.59tr, representing 13.60%, from the year’s opening level of N11.72tr.

Bearish Sector Indices
All the sectoral performance indices closed red on Tuesday, with the NSE Banking index leading the decliners, after losing 2.40%; followed by the 1.44% drop in the Insurance index; just as Oil/Gas, Consumer, and Industrial Goods indexes lost 0.53%, 0.36%, and 0.17% respectively.
Market breadth remained negative as decliners outnumbered advancers in the ratio of 28:6; while market activities in volume and value rose by 40.59% and 218.09% respectively to 154.03m shares worth N2.83bn; from previous day’s 109.56m units valued at N888.17m. Volume was driven by transactions in Nigerian Breweries, Transcorp Plc, FBN Holdings, UBA and UACN Property.
The best-performing stocks for the session were ABC Transport and NPF Microfinance which gained 9.68% and 7.96% respectively to close at N0.34 and N1.22 each, on the back of market forces. On the flip side, Cadbury and Sterling Bank lost 9.91% and 8.64% respectively, closing at N10.45 and N2.01 on profit-taking.

Market Outlook
The outlook remains mixed with the expected profit-taking, as investors position ahead of the quarter-end, while bargain hunters take advantage of low stock prices to position, now that the NSE index has pulled back. Discerning investors should latch on it to average down and recoup their investment immediately a recovery stage is set through economic policies and things start to change gradually to influence equity prices positively, while investors watch these sectors that have become defensive recently like insurance, banking, industrial goods, services, and oil/gas that will go bullish in no distance time. Also, with all eye fixed on the newly appointed economic advisory council to settle down and kickoff.

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CRO|Investdata Consulting Ltd

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