Market Update for June 26
The last trading week on the Nigerian Exchange for the month of June started on mixed sentiments of buying interest in some stocks and profit taking, as it continued the bullish upbeat on a low traded volume, forming a top pattern reversal that needed to be confirmed. Also, the bearish divergence has persisted on the daily chart for some trading sessions in the midst of seasonal ongoing quarter end window dressing by fund managers and other market players.
The benchmark NGX All-Share index closed higher on the strength of upward movements in highly priced stocks and blue chip companies that recorded price gain as a result of buying interests, while accumulating positions observed in these companies. The NGX had a positive market breadth, reflecting the fact that buyers are in control, despite the decreasing momentum in the face of the seeming rise in the index.
Market players have continued to digest the policy directions of the government on the economy and financial market, as well as sociopolitical reset is ongoing to put the nation on a progressive path. Also, the new government is following through its policy statement, even as the market awaits further guidelines, strategies and agenda to achieve all that were promised to a new hope.
Monday’s market performance remains above the 59,000 mark, despite the nixed sentiments of profit taking and buying interests during the session, with the index still at its 16-year market high on a less than average trade volume of transaction. In the process, many stocks hit new 52-week highs on strong buying sentiments 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 the stocks on the exchange cheaper and attractive for foreign investors.
The major sectors of the market witnessed a buying interest 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 is 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. Also, all eyes are on the audited financials of March year-end companies.
The NGX is currently trading above its 100-Day Simple Moving Average and 200DMA on the daily and weekly chart, while heading to the 60,442 basis points level again, with more stocks 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.
To navigate the rest of the quarter and year profitably using fundamental and technical analysis to run, join investdata live sessions at noon every 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 bull-run. Despite the mixed volume pattern witnessed recent days, it is time to go shopping for undervalued stocks, sector rotation, go for defensive stocks and the next insider playing opportunity,
Meanwhile, oil price oscillation continued on Monday, rebounding slightly to trade at $74.57per barrel in the midst of fear of global recession on continued rate hike and mutiny in Russia. 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.
Meanwhile, Monday’s trading opened slightly in the upside and was sustained throughout the session, despite oscillating on positioning across the sectors and profit booking, a situation that pushed the NGX All-Share Index to an intraday high of 59,500.39bps, from its lows of 59,197.74ps, before closing above it opening figure at 59,477.70 point.
Market technicals were positive and mixed with a lower volume traded when compared to the previous session in the midst of breadth favoring the bulls on a mixed sentiment as revealed by Investdata’s Sentiments Report showing 53% buy position and 47% sell volume. The total transaction volume index stood at 0.87 points, just as impetus behind the day’s performance was strong, with Money Flow Index reads 82.32pts, from the previous day’s 81.95pts, indicating that funds entered the market.
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Index and Market Caps
The NGX All-Share Index at the end of the day gained 141.82bps, closing at 59,477.70bps, from its 59,335.99bps opening level, representing a 0.46% growth. Market capitalization rose by N145.87bn to N32.38tr, from the previous day’s N32.30tr, which also represented a 0.46% appreciation in value.
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The upturn was driven by demand for stocks like BUA Cement, Zenith Bank, GTCO, UBA, PZ, Accesscorp, Ikeja Hotel, Mansard, Lafarge Africa, Dangote Sugar and Eterna, among others. This impacted positively on Year-To-Date gain, which increased to 16.05%, while Market Capitalization YTD gain went up to N4.38tr, representing 16.02% above its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes closed in the green, led by NGX Banking which gained 2.4%, followed by Insurance, Industrial, Energy and Consumer Goods with 1.7%, 1.0%, 0.5% and 0.1% respectively.
Market breadth was positive as gainers outpaced losers in the ratio of 47:23, while activities in volume and value were down after investors exchanged 552.68m shares worth N7.5bn, driven by trades in, Accesscorp, BUA Cement, GTCO, Universal Insurance and ETI.
Transcorp Hotel and Ikeja Hotel were the best performing stocks, gaining 10% each, closing at N19.36 and N3.30 per share respectively, on positive market forces and corporate action of 7 kobo dividend/ bonus share of 1 for 3 held. On the flip side, Unity Bank and Japaul Gold lost 10% and 9.2% respectively, closing at N0.99 and N0.59per share, purely on selloffs and profit taking.
We expect the positive sentiment to continue on positioning 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 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.
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605