Market Update for November 18
Trading activities for the third week of November on the Nigerian Exchange started on a flat note in the midst of selling sentiment and sector rotation, as market players continue to digest the latest inflation report of 33.88% and its impact on the upcoming CBN policy meeting. The committee has continually try to checkmate the runaway inflation with rate hikes for almost three years, the effort is yet to yield the expected results.
The economic manager’s strategy to attract foreign inflow with high interest rate at the detriment of domestic economic expansion and growth is driving unemployment rates, among other ills.
The composite NGX All-Share index closed marginally higher, reflecting price appreciation of blue chip companies in the face of low traded volume and positive breadth, signaling the onset of the distribution phase amid recovery, after the index had form a top chart pattern and bearish hammer in an uptrend which needs confirmation as trading opens on Tuesday. As Champion Breweries notified the market of its extraordinary general meeting and Ucap informing the investing public of its insider dealings during the session.
Meanwhile, the NGX still presents buy opportunities for investors and smart traders who understand the importance of buying low and selling high in any market condition in the midst ongoing volatility. This is particularly true now that many stocks on the NGX are undervalued with high upside potentials, while investors carryout sector rotation on the strength of economic events and quarterly earnings reports that reveal the states of various companies on the NGX. Already, many companies posted stronger Q3 numbers that show inherent value with high possibility of higher payout at the end of the current financial year as portfolio reshuffling continue in the midst of positioning for year-end seasonality and others.
The selling sentiment in the midst of bearish hammer reversal chart pattern and retracement from resistance level of 97,802.56 basis points and 97,855.16bps, after forming a topping-tail and hammer candle in a rally. This created the perfect setup for high probability of downtrend to catch end of year repositioning at a lower price. Also, the index is trading above the T-line and flat on the two moving averages of 50-EMA and 50-SMA, this indicate relatively strong momentum and somewhat in the midst of changing market fundamentals and technicals on the NGX and the economy.
Technically, the NGX is in a dicey phase as buyers and sellers fight for dormancy in the midst of recovery and mixed sentiment, as transaction volume continued to oscillate below average traded volume which signal the absence of institutional investors in the market. Candlestick formation and momentum indicators reveal a somewhat weakness and strength in the market. The ADX is flat at 23.17 points, while RSI and Money Flow Index were up to read 50.78 and 24.27 points against the previous session’s 50.51 and 18.49 points respectively. Consequently, market players should watch this current trend and trade wisely in the face of funds returning to the market on a selling sentiment in some sectors and position taking in others. Also, trading volume pattern continued to oscillates, suggesting buying interest and selloffs in the market amid players studying the corporate earnings and policy direction of the government that look confused.
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Oil prices on Monday were up to continued its oscillation, trading at $73.36 per barrel in the midst of the news of production halt at Norway’s Johan Sverdrup field due to power outage and weak economic data from China. As OPEC remain indifferent on production policy in the face of ongoing geopolitical tensions and conflict in the Middle East. As demand outlook remained mixed in the midst of rate cuts by the major central banks of the world and OPEC unclear direction on output increase ahead of 2025. The rising geopolitical uncertainties across many economies remains a threat to the global economy and energy consumption. 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.
Meanwhile, Monday’s trading opened in the upside and was sustained throughout the session, despite oscillating on position taking in blue chip companies and selloffs in other stocks. This situation pushed the NGX’s index to an intra-day high of 97,855.16bps from its lows of 97,713.48bps, before closing slightly above its opening level at 97,747.27bps.
Market technicals were positive and mixed with higher volume when compared to the previous session in the midst of breadth favouring the bulls on a selling sentiment as revealed by Investdata’s Sentiments Report showing 24% buy position and 76% sell volume. The total transaction volume index stood at 0.95 points, just as impetus behind the day’s performance was weak as Money Flow Index inched up to read 24.27pts, from the previous day’s 18.24pts, indicating that funds are entering the market at this oversold region.
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Index and Market Caps
At the end of trading, the benchmark NGX All-Share Index inched up 24.99 basis points, closing at 97,747.27 from 97,722.28bps, representing a 0.03% up. Market capitalization rose by N15.27bn, at N59.23tr from the previous day’s N59.22tr, representing a 0.03% value gain.
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Monday’s upturn was driven by position taking and accumulation in the shares of Wapco, Oando, Conhall, BetaGlass, Enusell and JohnHolt, among others. This impacted mildly on Year-To-Date gain as it inched up to 30.76%, while Market capitalization gain stood at N14.87tr, representing 44.03% growth over its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, as NGX Industrial Goods and Insurance indexes closed 0.66% and 0.42% higher respectively, while the NGX Banking led the decliners after losing 0.58%, followed by Consumer and Energy with 0.27% and 0.08% respectively.
Market breadth was positive, as gainers outnumbered losers in the ratio of 29:19, while transactions in volume and value were mixed after investors exchanged 413.35m shares worth N5.34bn. Volume was driven by trades in Japaul Gold, Conhall Plc, Accesscorp, UBA and Ucap.
John Holt and Eunisell were the best performing stocks, gaining 9.97% and 9.92%, closing at N8.49 and N13.18 per share respectively on the back of sentiment and market forces respectively. On the flip side, Thomaswy and University Press lost 8.85% and 7.83% respectively, closing at N1.75and N3.65per share, purely on profit taking and selloffs.
Market Outlook
We expect mixed sentiments to continue on bargain hunting, profit taking and low valuation, as investors digest CPI data and position taking by smart money for year-end. Also, sector rotation and portfolio rebalancing continued in the market with investors taking advantage of pullbacks and correction to buy into value.
This is amid the volatility and pullbacks 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.
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- Impact of 2025 National Budget & Changing Government Policies On Investment Windows, by Mr Peter Sunday Adebola, Managing Director/CEO Edgefield Capital Management Ltd
- Opportunities In Fixed Income Market & Inflation Outlook In 2025, by Mr Teriba Adeboye, MD/CEO, Qualinvest Capital ltd
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- Real Estate Investment Opportunities in 2025 Amidst Fiscal Policy Reforms Of The Government, Mr Tope Ojo, Managing Partner,Tope & Tunde Estate Surveyors & Valuers
- How To Navigate The Alternative Markets To Grow Your Portfolio in 2025, by AlhajiGarba Kurfi, MD/CEO APT Securities & Funds Ltd
- Building All-Weather Portfolio To Stay Ahead Of NGX IN 2025 & Beyond, by Mr Abiola Rasaq, Former Head, Investor Relations & Portfolio Investments United Bank For Africa Plc
- Profitably Chart Patterns & Timing To Trade “Year Ending In 5” Effect On NGX In 2025, by Mr Abdul-Rasheed Oshoma Momoh, ED Operations at, TRW Stockbrokers Ltd
- The Place Of Corporate Earnings In Trading & Investing For Retirement, by Mr Kebira Jimoh Aruna, MD/CEO GlobalView Capital Ltd
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Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
08028164085
