Positive Momentum Lingers On Upbeat Sentiments, As investors Review Unfolding Devts

Market Update for June 14

The bullish momentum on the Nigerian Exchange continued at midweek, following the unification of exchange rate by the central bank in line with the policy statement of President Bola Tinubu in his inaugural speech, in line with market expectation. This further boosted investors’ buying sentiment and confidence, amid the hope that the move would attract foreign investors, due to the Naira devaluation, making Nigerian stocks cheaper. On the other hand, cost of production in the short-term is expected to remain high and affect company performance, especially those into manufacturing, as well as corporate tax. This suggests that sector rotation will continue as investors and traders rebalance their portfolios ahead of the Consumer Price Index for the month of May, and half-year earnings reports in July, in the midst of positive economic outlook of the new government.
The economic and financial market reset is here, with new market dynamics and changing trading environment that calls for change in strategies, as all eyes are on more pronouncement by the government, restructuring of the system and. This is just as the market and economy await further guidelines, appointment, implementation and agenda to achieve all that were promised.
At the midweek, the NGX extended its positive outing back to back for two consecutive sessions on position taking to breakout 59,000 psychological line and test the 60,000 mark before sliding. However, the key performance NGX All Share index closed powerfully higher to trade at 16-year market high on a very high traded volume and strong positive market breadth heading to the all-time high of 65,584.68 attained on March 5, 2008. In the process, many stocks are hitting new 52-week highs on a buying pressure and an expected fall in interest rates as the government have started the reform of monetary policy with one single foreign exchange rates.
As more equities continue to witness a rally on the inflow of funds into low, medium and high cap stocks, even as many company’s dividend yield becomes lower due to high prices. These should guide investors on how to reposition their portfolios ahead of the Q2 earnings reporting season, as quoted companies started notifying the exchange and investors of their closed periods and board meeting dates to approve half-year financials. Also, all eyes are on audited financials of March year-end companies.
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Oil price oscillation continued, as it trades at $73.52per barrel in the midst of Fed temporarily leaving rate unchanged to watch inflation and recent rate cut by China to support its economic recovery that had remain weak, even as the Russia-Ukraine war continues. This is in addition to rising geopolitical tension across the globe, the prevailing high interest rate regime and soaring inflation, despite slowing down across the globe remain potent threat to world economy. 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.
Midweek’s trading started slightly in the upside before jumping in the afternoon on the news of the foreign exchange rate unification by the CBN, which was sustained throughout the session, on increased positioning across all sectors, especially the banking stocks. This situation pushed the NGX All-Share Index to an intraday high, from its lows of 60,072.73ps, before closing above it opening figure at 59,985.10 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 95% buy position and 5% sell volume. The total transaction volume index stood at 2.16 points, just as momentum behind the day’s performance was strong, with Money Flow Index reads 83.42pts, from the previous day’s 81.12pts, indicating that funds entered the market.
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Index and Market Caps
The composite NGX All-Share Index, at the end of the session gained 1,821.51bps, closing at 59,985.10bps, from its 58.263.59ps opening level, representing a 3.11% growth. Market capitalization rose by N991.81bn to N32.66tr, from the previous day’s N31.67tr, which also represented a 3.11% value gain.
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Meanwhile, Wednesday’s upturn was driven by increased buying interest in the shares of Seplat, Dangote Sugar, MTNN, Stanbic IBTC, Zenith Bank, GTCO, UBA, Accesscorp, Total, FCMB, NB, ETI and SterlingNG among others. This impacted positively on Year-To-Date gain, which increased to 17%, while Market Capitalization YTD gain went up to N4.58tr, representing 16.96% above its opening level for the year.

Bullish Sector Indices
Sectoral performance indexes closed higher except for the NGX Industrial Goods that closed 1.1% lower, while the NGX Banking led the advancers after gaining 26.5%, followed by Insurance, Energy and Consumer goods with 23.0%, 16.0% and 4.10% respectively.
Market breadth was strongly positive as gainers outpaced losers in the ratio of 72:13, while transactions in volume and value were marginally up after players exchanged 1.30bn shares worth N21.1bn, driven by trades in, UBA, GTCO, Zenith Bank, Accesscorp and Fideloty Bank.
Seplat and MTNN were the best performing stocks, gaining 10% each, closing at N1,320 and N284.90 per share respectively, on positive market forces and sentiment. On the flip side, PharmDeko and CWG lost 9.65% and 9.44% respectively, closing at N2.06 and N1.63per share, purely on profit taking.

Market Outlook
We expect the positive momentum to continue on upbeat sentiment in the midst of investors reassess the upside potentials of the stocks and expectation of May Consumer price index. As portfolio realignment persists, just as more policy pronouncements and appointments to give direction. Also, Q2 earnings reporting season draw closer to confirm the real state of the company performance and attract liquidity in the midst of markdown dates and expected 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