Trading activities on the Nigerian Exchange had a positive outing in the second week of the month, wiping away the previous week loss position.
As a result of increasd buying interest in the midst of impressive half year earnings from the interim dividend paying banks and expected August comsumer price index to reveal the rising price of goods and services.
Knowing that the state of inflation report and other macroecoimic indices will determine the rate decision at the coming CBN policy meeting, Rates and yields in the fixed income market had modortaed, especially the TB primary market auction that had recorded decline in all tenors for three to two consecutive auctions.
This is expectd to trigger flowof funds into equity space as portfolio rebalancing persists.
With the major central banks of the world gurdually winding down rate hike cycle to trigger and boost economic activities again.
The global stock market ralled amidst key positive economic data and Fed rate cut expectation in the next policy meeting.
The reaction of market players to serveral economic data ranaging from US, China inflation reports and UK’s GDP flatten for two months in the face of unemployment rate inching up.
The latest US inflation figure strengthened market expectations of rate cut, even when some are looking forward to 25bsp or 50 basic points.
In the new week, it is expected that the bullish momentum will continue on rate cut by Fed and that of Bank of England doing same. after closing lower, halting the previous week’s
Back home, the bullush outing was driven by position taking across major sectors of the market and blue chip stocks which impacted positively on the composite NGX All Share Index as it closed higher on above average traded volume and positive market internals to halt the negative opening of September, even as the remaining half of the month looks dicey to creates opportunities for portfolio rebalancing and positioning for the last quarter of the year.
Looking at price action and candlestick formation on a multiple time frame indicates possibility of trend continuation or reversal which depends on market forces in the new week.
All eyes are still on changing fundamentals in the oil and gas sector of the nation economy, as Federal Government announced NNPC as the offtaker of Dangote Refinary, Premium Motor Spirit.
This should offer an opportunity for the Nigerian Government to rethink its policies around energy, oil and gas to drive economic production and growth momentum ahead of seasanality in the coming month and quater.
This is where the fiscal and monetary authorities should shake hand to address the nation’s lingering hyperinflation challenge, especially with insecurity already a priority of government at all levels.
This is the time to chart a new course for the nation’s economy and progress.
The NGX’s recovery and uptrend were as a result of buying interest and curiclar flow of fund on the back of moderating fixed income yield environment and expected end of the quarter window dressing.
As position taking in banking stocks and others supported the market. Since every investment is against the future expectation, government policies, company information, macroeconomic data and others that influence prices in the short to long-term should guide your investment decisions as you follow the trends and changes in the market.
Better understanding of the big picture of the market and our actions as market players in any market cycle would determine your results or returns ultimately.
Technically, the market is recovery, as NGX index action is set to breakout the T line on a weekly chart, as it trades above 50 SMA and EMA for same period.
The possibility of continuation of trend is high in the new week.
The sentiment report for the period revealed a buying pressure of 100% buy position and sell volume of 0% as MFI looked up slightly to reads 57.15 points which indicates that funds entered the market during the week.
The positive market breadth for the period occurred in the midst of accumulation and profit taking.
As bargain hunters took advantage of pullbacks to buy into fundamentally sound companies with high yield, strong earnings power and low valuation.
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Also, get investdata’s 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 corrections and pullbacks to continue the markdown phase.
As volume of transaction witnessed within the week remain high, it is time to go shopping for undervalued stocks, sector rotation and the next insider dealing opportunity.
Oil price during week rebounded to trade at $72.14per barrel following the net length due to weak financial demand for oil that dropped to its lowesr point in history.
All these in the midst of OPEC delaying output hike and ongoing conflict in the middle East.
As increasing geopolitical tensions around the world threats supply, coupled with ongoing war in Ukraine and Russia disrupting oil output in the face of Fed likely to cut rates in their next policy meeting.
The up and down movement of oil price has continues to drive volatility across different investment windows and inflation that is slowing down in mature economies.
Movement Of NGXASI
NGX witnessed a rebound for the week, as bulls dominated trades in the face of mixed perforamce, recording three sessions of up market and two days of negative outing to close higher on above average traded volume and positive market internals in the face of buying sentiment during the period.
The week trading started on a negative note, halting the previous gain position as the index close lower by 0.24% on Monday, this trend was shortlived on Tuesday when the market rebounded with 0.62%, before the reversal at the midweek on profit taking and selling sentiment as the benchmark index slide by 0.09%, the trend was reversed on Thursday when the NGXASI went up by 0.32% on position taking in MTNN and others.
The market sustained this on Friday as the index gained 0.44%, bringing the week’s total gain to 1.06%, compared to the 0.15% lost in the previous week.
Subsequently, the benhmark NGX All-Share Index jumped up by 1,023.09basis points, closing at 97,456.62bps, from previous week’s 96,433.53bps closing level, after touching an intra-week high of 97,460.08bps from a lows of 96,068.36bps. Market capitalisation rose by N708 billion to close at N56tr, representing a 1.10% appreciation in value.
The difference between the index and market cap was a result of Japaul Gold listing of its additional 8 billion shares from private placement at N2.50.
Also, the share price of Learn Africa and Spvergign Trust Insueance were adjused for a bonus of one new share for eight share held and 3 kobo dividend respectively.
The week advancers’ table was dominated by medium and low priced stocks in the midst of buying sentiment in growth and undervalue stocks ahead of more banking results hitting the market and inflation data.
Also notable was the fact that market players were taking advantage of the pullbacks to reposition their portfolios and carrying out sector rotation.
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Market technicals for the period were position and strong as revealed by volume and market breadth, with gainers outnumbering losers in the ratio of 52:31 on a buying pressure as indicated by investdata sentiment report showing 100% ‘buy’ volume and 0% sell position.
Money Flow Index was inched up at 57.15 points from the previous week’s 56.17 points, an indication that funds entered the market on a weekly time frame.
Technical View
The NGX index’s action at the end of the week rebounded to signaled trend reversal or continuation, which needs to be confirmtion in the new week, as all eyes are on more financials from dividend paying banks that are yet to published their earings report, as well as macroeconomic reports that are expected to hit the the market in the face of changing momentum and sentiment, especially from the oil and gas companies.
Buying interest hit some blue chip companies in the face of low valuation and interpretation of decline in TB auction rates, even when higher yields in the alternative market still remain below inflation rate.
Bullish Sectoral Indices
The sectoral indexes of the week were in green, led by NGX Banking index that gained 5.12%, followed by Energy, Insurance, Consumer and Industrial goods with 2.00%, 1.59%, 1.47% and 0.17% respectively.
Activities in volume and value were mixed, as players exchanged 2.58bn shares worth N51.21bn, compared to previous week’s 2.14bn units valued at N51.22bn. Volume was driven by Financial Services, Oil/Gas industry and Services industry, boosted specifically by Jaiz Bank, Zenith Bank, Japaul Gold, Accesscorp and Transcorp.
Caverton and RT Briscoe were the best performing stocks during the week, gaining 59.75% and 42.02% respectively, closing at N2.54 and N3.65 per share on market forces and sentiment.
On the flip side, Learn Africa and Julius Berger lost 22.15% and 17.89% respectively, at N3.62 and N140.00 per share, on bonus adjustment and profit taking.
Outlook for the week
We expect a mixed sentiment to continue on bargain hunting and sector rotation. Also, as more banks earnings reports are likely to hit the market in the face of portfolio rebalancing.
As players take advantage of pullbacks to buy into value stocks ahead of CBN policy meeting. As investors are watching with rapt attention.
However, retracement to the 96,000bps level and below is possible on correction as global and domestic events unfold.
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