Equities

Caution On NGX, As Investors Bet On MPC Outcome, Amid Year-end Seasonality

Market Update for November 22

Monday’s trading activities on the Nigerian Exchange turned positive, halting three consecutive sessions of losses to start the week, on a very high traded volume and positive market breadth, propelled by buying interests in blue-chip stocks across various sectors except for the industrial goods, where we saw profit booking in BUA Cement and Lafarge Africa.  

The NGX All-Share index closed higher on positive sentiments, despite expectations from the two-day Central Bank of Nigeria’s Monetary Policy Committee meeting, the last for the year, amidst the unclear yield direction in the bond and Treasury Bills market, and ahead of this week’s primary market auction. The high volume was majorly boosted by off-market transactions in Oando at N6 each, as all eyes are on the company for the release of its earnings reports that would enable investing know its going-concern status after its long-drawn battle with the market’s apex regulator- the Securities & Exchange Commission (SEC).

Technically, the NGX index action remains strong in the face of profit-taking and portfolio repositioning, as the index retraced up on Monday to continue its sideways trend within the rectangular channel. Momentum indicators for the day were mixed nonetheless, with ADX reading 60.55 and the money flow index looking up at 59.58 points on the daily chart. The continuation of this trend depends highly on the interplay of market forces as investors await the outcome of the MPC meeting and this TB primary auction to know the direction yields.

Meanwhile, Monday’s trading opened slightly on the upside, which was sustained throughout the session, despite oscillating on position taking in blue-chip stocks and selloffs. This situation pushed the NGX index to an intraday high of 43,290.20 basis points from its lows of 43,199.27bps and thereafter closed marginally above its opening figure at 43,260.13bps.

The session market technicals were positive and strong as volume traded was higher than the previous day in the midst of breadth that favoured the bulls on buying sentiment as revealed by Investdata’s Sentiment Report showing 74% ‘buy’ volume and 26% sell position. The total transaction volume index stood at 1.15 points, just as the impetus behind the day’s performance remains relatively strong, Money Flow Index read 59.58 points, from the previous day’s 58.29 points, indicating that funds entered the market.

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Index and Mkt Cap Movement

The key performance index NGXASI inched up by a marginal 67.01 basis points, at 43,260.15bps at the end of Monday’s trading, after opening at 43,199.27bps, representing a 0.14% up, just as market capitalization rose by N31.12bn, closing at N22.58tr, from the opening value of N22.54tr, also representing 0.14% value gain.

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Monday’s upturn was a result of demand for stocks like Nestle, Zenith Bank, GTCO, Oando, FBN Holdings, UBA, Fidelity Bank, Ucap, Conoil, ETI and Honeywell among others, which impacted negatively on Year-To-Date gain, increasing it to 7.42%. Market capitalization stood at N1.56tr YTD, representing a 7.23% growth from the year’s opening value.

BullishSector Indices

Sectoral performance indexes were bullish, except for the NGX Industrial Goods that closed 0.14% lower, while the NGX Oil/Gas index led the advancers, gaining 1.27%, followed by Insurance, Banking and Consumer goods with 0.86%, 0.76%, and 0.01% respectively.

Market breadth turned positive as gainers outnumbered losers in the ratio of 18:15, while transactions in volume and value terms were up after stockbrokers traded 2.4bn shares worth N16.47bn, compared to the previous day’s 199.52m units valued at N2.81bn. Volume was boosted by trades in Oando, Mutual Benefits Assurance, FBNH, GTCO, and Sterling Bank.

Honeywell Flour and NEM Insurance were the best-performing stocks, gaining 9.73% and 7.89% respectively, closing at N3.72 and N2.05 per share respectively on the news of the planned acquisition of 76.7% of its entire shares in issue by Flour Mills of Nigeria Plc, as well as market forces. On the flip side, UPDC and FTNCocoa lost 9.74% and 9.09% respectively, closing at N1.39 and N0.40 per share, purely on selloffs and profit-taking.

Market Outlook

Being the last trading day of the MPC meeting, and in the midst of an unclear direction of yields in the fixed income market, as well as the upcoming FGN Bonds issuance, we expect the market to maintain the oscillating posture. As seasonality and cycles are likely to influence equity prices ahead of year-end, as high volume resurfaced on a positive sentiment that is creating new buy opportunities and holds on to the strength of the Q3 numbers. Also, candlestick formation and volume traded during the day’s trading revealed that buyers are in control, as the index rebounded. Also, we note that institutional players are not selling but positioning in blue-chip companies, as the pullback was on a light volume. It is equally noteworthy that this pullback at this level is for the accumulation of more positions ahead of year-end seasonality. Also, many stocks are trading within their buy ranges, a situation expected to attract more funds into the equity space, given the Dividend Yield capable of serving as a hedge against inflation.

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1.  Balanced Trading: Playing Nigeria’s Multiple Exchanges For Diversification, MrOlatundeAmolegbe, CEO, Arthur Steven Asset Management  Ltd &President of CIS 
2. Agriculture, Economic Recovery & Diversification: Where Is Commodity Trading In Your Portfolio, Mr. AkinyinkaAkintunde, Business Development Manager, AFEX Commodities Exchange Ltd.
3. Technical Outlook & Indicators For Profitable Market Timing, Mr Abdul-Rasheed OshomaMomoh, Head Capital Market at, TRW Stockbrokers Ltd 
4. Benefits & Dangers Of Fixed Income Instruments In An Inflationary Environment, MrTeribaAdeboye, MD/CEO, Qualinvest Capital ltd
5. Economic Outlook and implications of the N16.45 Trillion 2022 Budget On Sectors/Stock Market, Mr. OluwasegunAkinwale, Senior Portfolio Manager,Coronation Asset Management Ltd
6. Profitable Stock Picks Made Easy, Using Fundamental Tools, Mrs. Ebiere Helen Fumudoh, MD/CEO, Norrenberger Securities Ltd
7. The Role of Real Estate & REIT Instruments In the Ecosystem, Mr Tope Ojo, Managing Partner,Tope & Tunde Estate Surveyors &Valuers 

8. Trade Opportunities & 10 Golden Stocks for 2022, Mr Ambrose Omordion, Chief Research Officer, Investdata Consulting Ltd

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CRO|Investdata Consulting Ltd

info@investdata.com.ng

ambrose.o@investdataonline.com

ambroseconsultants@yahoo.com

Tel: 08028164085, 08179547605

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