Renowned capital market operator, Mr. Ambrose Omordion of Investdata Consulting Ltd has reported that it was a mixed trading session on the Nigerian Exchange throughout Monday, opening the last full trading week of August on a positive outing, thereby extending the bull transition a second consecutive session.
The Delta-born capital market expert called on the public to “sign up for Investdata’s buy and sell signal setup and not to delay because the number of stocks entering their over-sold range has increased as market correction and pull backs call for caution and positive chart patterns to be on our watchlist. These stocks have potentials to retrace, considering their earnings prospects and the oscillating moves in an upmarket and weak economy.”
Earlier, Omordion reported that the recent positive outing “was in the midst of increased buying interest in oil/gas and other blue chip stocks that pushed the benchmark NGX All-Share index to close higher. Despite the selloffs in the utility/power and banking sectors that impacted the candlestick pattern and formation at the end of the day’s trading revealed a bearish hammer that needed confirmation last Tuesday.
“However, there was selling sentiment on Monday, in the face of a low traded volume and positive market internals that reflected the psychology of market players for the session to reveal the state of NGX that provides guidance for discerning investors and smart traders to take decision. As the market revealed sign of weakness, despite closing in the green to trade above the psychological line of 96,000 after testing 96,719.05bps ahead of month end.
“The mixed momentum and sentiment reflects in the market’s dynamics of volatility that creates the needed opportunity to buy low and sell high, especially as most of the listed companies have become undervalued owing to the recent downtrend in their share prices, even as the pullbacks are driven by high cap stocks that are facing selloffs due to sector rotations and portfolio rebalancing. This pullback below the T-line and 50-Day Moving Averages confirms the weakness of momentum and the recovery phase of the market.
“Position taking across some major sectors of the market also weighed in on the NGX, creating opportunities for market players to pick value stocks at discounted prices.
“This is especially true now that corporate numbers reveal the position of many companies on the exchange, as confirmed by the Q2 GDP figures that looked up marginally at 3.19%, up from 2.98% recorded in Q1 2024. This performance was majorly driven by the service sector which grew by 3.79% and contributed 58.76% to the aggregate GDP. The selling sentiment and pullback are a different phase of market that requires change in strategies to navigate and follow the trend. It is expected that smart money will take advantage of the oversold state in the market to buy into value and defensive stocks to support rebound any moment from now.
“The NGX index’s action remains below the T-line and the two moving averages of 50-EMA and 50-SMA indicate weakness in the midst of changing market fundamentals and technicals. We note that the economic reforms of the government, measured by the outpouring of fiscal and monetary policies are yet to put the nation’s economy on the path of recovery, due to the continued mismatch of these and previous ones. There are also issues with the implementation style amid the oscillating oil production output even as the Naira continues to depreciate at a time that oil is rebounding to sell above $80 per barrel at the international market.
“More companies notified the NGX of their AGM and resolutions on Monday, the latest came from Veritas Kapital and Notore Chemical Industries, while FBNH informed the market of the cancellation of its AGM earlier rescheduled for September 3, 2024. Just as The Initiate and Ucap informed the exchange of insider dealings in its shares. In the midst of all these, it is safe for investors to target companies with consistent track records of dividend payment, strong fundamentals and growth prospects that will support further growth in earnings which price feeds on in any market cycle.
“Technically, the NGX is still weak but trying to rebound in the face of selling sentiments as revealed by the candlestick formation and momentum indicators. The ADX is looking up at 32.40, while RSI and Money Flow Index were up to read 33.23 and 37.84 points against the previous session 32.31 and 31.70 points respectively. Market players should watch this current trend and trade with caution in the face of funds returning to the market, despite profit taking in some sectors.
Also, trading volume pattern continued to oscillates, suggesting buying interest and selloffs in some sectors in the midst of players digesting the recent inflation and GDP numbers.
“To navigate the rest of this quarter and beyond profitably using fundamental and technical analysis to run, join investdata live sessions at noon every Monday, Wednesday and Friday 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 range market. Despite the oscillating volume of transaction witnessed in recent time, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.
“Oil prices rebounded on Monday to continue its oscillation as it trades at $81.43 per barrel in the midst of escalating tension in the Middle East conflict that increased the risk of supply disruptions and rate cut excitement. As rising geopolitical uncertainties across many economies is a threat to the global economy.
This trend may likely continue for the rest of 2024, while the up and down movement continues to drive volatility, even as the raging war between Ukraine and Russia continues to influence global oil supply and demand.
“Monday’s trading opened in the green and was sustained, despite oscillating throughout the session on buying interests in blue-chip companies and selloffs in others, a situation that pushed the NGX’s index to an intra-day high of 96,719.05bps from its lows of 95,973.45bps, before closing slightly above its opening level at 96,037.28bps.
“Market technicals for the session were positive and mixed with higher volume when compared to the previous session in the midst of breadth favoring the bulls on a se sentiment as revealed by Investdata’s Sentiments Report showing 9% buy position and 91% sell volume. The total transaction volume index stood at 0.74 points, just as impetus behind the day’s performance was relatively weak as Money Flow Index was up to read 37.84pts, from the previous day’s 31.70pts, indicating that funds entered the market.
Omordion wrote recently that “for you to successfully invest and trade in this volatile market for the rest of the year, order for Investdata’s video on Buy & Sell Technical Analysis Toolbox to navigate the volatile market profitably, enhance trading decisions and boost your bottom line. Also, to up your game in stock trading and investing, understanding the key to trading price and index action will go a long way to make the difference in your trading results, check out the video materials above and take action”.
On index and market caps, Omordion reported that “the composite NGX All-Share Index, at the end of Monday trading inched up by 63.83 basis points, closing at 96,037.28bps after opening at 95,973.45bps, representing a 0.07% up. Market capitalization rose by N36.67bn, closing at N55.17tr from the previous day’s N55.13tr, representing a 0.07% value gain.
Omordion asked the public to “take advantage of this service to buy right and sell right at the current oscillating market in the midst of earnings season, portfolio reshuffling and repositioning as we await an economic reform policy that can stimulate and re-track the economy to the path of growth and development.
“This upturn was driven by position taking and accumulation in the shares of Okomu Oil, Oando, Veritas Kapital, BUA Foods, Eterna and Cutix among others. This impacted mildly on Year-To-Date growth inched up to 28.44%. Market capitalization YTD gain up to N10.38tr, representing 33.93% above its opening level for the year.
On bullish sector indices, he said that “sectoral performance indexes were up, except for the NGX Banking Index that closed lower by 0.41%, while the NGX Consumer goods led the advancers after gaining 1.83%, followed by Insurance, Energy and Industrial goods with 1.05%, 0.73% and 0.01% respectively.
“Market breadth was positive as gainers outnumbered losers in the ratio of 28:18, while transactions in volume and value were mixed after investors exchanged 390.51 million shares worth N3.88bn.
Volume was driven by trades in Veritas Kapital, Japaul Gold, FCMB, Prestige Assurance and Chams. Eterna and Okomu Oil were the best performing stocks, gaining 10% and 9.99% respectively, closing at N23.10 and N379.80 per share respectively on the back of market forces and sentiment respectively. On the flip side, Transcorp Power and Abbey Building lost 9.99% and 9.69% respectively, closing at N335.20 and N2.33 per share, purely on profit taking.
Omordion said that on market outlook, “we expect mixed sentiment to continue as players digest Q2 GDP figure of 3.19%, profit taking and sector rotation amidst oversold region.
Portfolios repositioning is however continuing, as investors take advantage of pullbacks to buy into value.
This is amid the volatility and pull backs that add more strength to upside potential. Consequently, investors should take advantage of price correction, also looking at the trends and events across the globe and domestically”, Omordion concluded.
