Repositioning Continues Ahead Of Q3-end Window Dressing, Earnings Season

Market Update for September 24

Trading activities on the Nigerian Stock Exchange on Thursday maintained its recovery path recording higher gain as buying pressure and order flow remain positive and strong for the fifth consecutive outing. With the rising momentum in the market as of Thursday’s session, the benchmark index is set to turn positive, recovering from the March dip and breakout of the recent resistance level on a positive sentiment and high traded volume ahead of quarter end accounts rebalancing and window dressing. 

The expected Q3 earnings reporting season in the midst of the rates crash and the prevailing low stock valuation that revealed upside potentials of these companies. The worsening negative real returns in other investment windows have triggered flow of funds into equity assets, especially against the backdrop of the untamed inflationary pressures. This is also despite the continued oil price oscillation in the international market. 

As the Q3 operating period gradually comes to an end, it is expected that the low interest regime and possible positive numbers from the companies will expectedly boost market fundamentals.

Meanwhile, the third quarter earnings season reporting season will commence in a fortnight from now, and in our opinion, clear projections of expected Q3 earnings will give investors an advantage over others who want to see the result before taking position.

Do recall that the normal practice is to use third quarter earnings as a foreshadowing of full year numbers. In other words, positioning ahead of the release is an intelligent investment decision.

Thursday’s trading opened on the upside and oscillated for the rest of the day on a positive buying sentiment in high cap stocks that pushed the composite NSE Al-Share index to an intraday high of 26,021.75 basis points, from its low of 25,783.01bps, and thereafter closed above its opening figure at 25,987.14ps.

Market technicals were positive and mixed, with transaction volume lower than the previous session in the midst of breadth favouring the bulls on positive buying sentiment, as revealed by Investdata’s Sentiment Report showing 86% ‘buy’ position and 14% sell volume. Total transaction volume index stood at 1.47 points, just as the impetus behind the day’s performance remained relatively strong, with Money Flow Index reading 66.44 points, from the previous day’s 66.95 points, an indication that funds entered the market.

Index and Market Caps

At the end of Thursday’s trading, the All-Share index gained 204.12bps to close at 25,987.14bps, after opening at 25,783.55bps, representing 0.79% growth, just as market capitalization rose by N106.72bn to close at N13.58 tr, after opening at N13.48tr, also representing 0.78% value gain.

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The upturn followed positioning in low, medium and highcap stocks likes Dangote Cement, MTNN, Nigerian Breweries, Guaranty Trust Bank, Zenith Bank, 11 Plc, UBA, Ecobank Transnational Incorporations, Access Bank and Lafarge Africa. This impacted positively on the index, reducing Year-To-Date loss to 3.19%, while market capitalization YTD gain firmed up at N622.88bn, representing 4.76% above the year’s opening value.

Mixed Sector Indices

Performance indexes across sectors were mixed with the NSE Consumer Goods, Banking and Industrial Goods closed 2.09%, 1.59% and 0.86% higher respectively, while the NSE Insurance and Oil/Gas dropped by 0.68% and 0.18% respectively.

Market breadth was positive with advancers outnumbering decliners in the ratio of 25:7, while activity in volume and value terms were down by 13.24% and 38.32% respectively, as players exchanged 359.31m shares worth N3.87bn. This volume was driven by trades in Sterling Bank, Guaranty Trust Bank, Zenith Bank, Fidelity Bank and Flour Mills.

 The best performing stocks for the session were Nigerian Breweries and Union Diagnostic which gained 10% and 8% respectively, closing at N47.85 and N0.27 per share on major shareholders increasing stake and market forces. On the flip side, Ardova and Daarcom lost 9.65% and 9.09% respectively, closing at N10.30 and N0.30 respectively on profit taking and selloffs.

Market Outlook

We expect profit taking as repositioning continues ahead of third quarter-end window dressing and corporate earnings season, despite the negative macroeconomic indices, given the further crash in money market rates, while inflation is at 13.22%, worsening the negative returns on many investment windows.

The mixed intraday movement is likely to persist as the month of September progresses in the midst of profit booking, as well as the mismatch of economic policies and negative macroeconomic indices. This is also against the backdrop of the fact that the capital wave in the financial market may persist in the midst of relatively low-interest rates in the money market, high inflation, negative Q2 GDP of 6.1% and unstable economic outlook for the rest of 2020 as government and its economic managers are going front and back with mismatch polices and implementation.

Also, investors and traders are positioning amidst the changing sentiments in the hope of improved liquidity and positive economic indices which may reverse the current trend.

We see investors focusing on portfolio adjustment and rebalancing by targeting companies with strong potentials to grow their Q3 earnings and dividend on the strength of their earnings capacity as the year last quarter is at the corner.

Again, the current undervalue state of the market offers investors opportunities to position for the short, medium and long-term, which is why investors should target fundamentally sound, and dividend-paying stocks for possible capital appreciation for the rest of the year.

Meanwhile, the home study packs on Strategies and How to invest profitably in this Changing Market Dynamics/ Recession, Mastering Earnings Season For Profitable Investing and Trading in any market situation/ cycles are available. To obtain your pack send ‘Yes’ or ‘Stock’ to 08028164085, 08032055467, 08111811223 now.


Theme- Life Beyond COVID: Investment Opportunities in Various Assets Classes


  1. Life Beyond the Pandemic: Personal Financial Planning, Investment and Trading Strategies in a Low Yield Environment (AlhajiGarbaKurfi, MD/CEO, APT Securities & Funds Ltd)
  2. How to Buy and Sell Stocks Profitably in Recession, Recovery and Boom (Mr. Abdul-Rasheed Momoh, Head, Capital Market TRW Stockbrokers Ltd)
  3.  Economic Recovery Scenarios, What’s the Fate of Equities and Other Assets Classes (Mr. OluwasegunAkinwale, Lead Analyst, Nova Merchant Bank)
  4. The Paradox of Declining Interest Rate and Rising Inflation: Confusion or New Realities for Investors (Mr. AbiolaRasaq, CSCS)
  5. The New Thinking in Fixed Income Market: Today and Tomorrow (Mr. KayodeTinuoye, Portfolio Manager, United Capital Asset Management)
  6.  Outlook for Alternative Asset Classes: Where are the ETFs, Commodities, REITS and Real Estate Opportunities (Mr. Taiwo Yusuf Head, Wealth Management, Meristem)
  7. Portfolio Restructuring and Rebalancing for Positive Returns Ahead of Market Rebound (Engr. EkwuemeMike  MD, X-Front Traders Ltd
  8. The Power of Earnings Quality, Value and Dividends in Equity Investment (Mr. Ambrose Omordion CRO Investdata Consulting Ltd)

The Summit will provide answers to these Seven question among others

  • Where exactly are the opportunities in the equity market, fixed income and others?
  • Which sectors or markets provide the post COVID-19 investment opportunities?
  • How investors and traders can take advantage of the low interest regime to build profitable portfolios
  • What are the prevailing market moves and who are the dominant players?
  • What are Smart Money and Retail investors doing?
  •  Where should investors look to enter the market or exit?
  • Is it the same every day, season and year?

Date: September 26, 2020


For more details, call 08028164085, 08032055467, 08111811223 now.

Ambrose Omordion

CRO|Investdata Consulting Ltd

ambroseconsultants@yahoo.comTel: 08028164085, 08032055467