Market Update for December 12

The bullish trend on the Nigerian Exchange continued on Thursday, after breaking out the consolidated handle of the earlier formed cup and handle chart pattern of the NGX index’s action, as a result of buying sentiments across some major sectors of the market. This impacted positively on the benchmark NGX All-Share index, sustaining its uptrend and recovery. Is Santa Claus rally here already? Or, is profit taking underway to create new entry opportunities in the market as some stocks make new 52-week high ahead of year end and Q1 earnings season.

The positive momentum and expanded breadth are reflections of inflow of funds into the equity space, as sector rotation and portfolio rebalancing continued to ushers in the New Year 2025. The gradual return of smart money at the current state and timing of the market creates buying opportunities for discerning players ahead of January effects that had turned a positive pattern and trends on the NGX in recent years to guide positioning in the right stocks at the right prices. The nation’s economic managers continue to trade the economy for foreign inflow with high interest rate that is driving low productivity and failed to checkmate inflation of today.

The NGX’s index cup and handle chart pattern formation reveals bullish trend, as players are looking to positive trend, with increasing number of companies hitting a new 52-week high. Just as end of the year positioning continued on the back of cross deals and others in the market. During the session, the following companies: Trans-Nationwide Express, NEM Insurance  and Custodian Investment Plc released their Q1 and Q3 2025 earnings forecast respectively, to guide the investing public. Just as Seplat informed the market of completion of the acquisition of MPNU, while Accesscorp signed agreement to acquire 100% of South Africa’s Bidvest Bank. Ucap updated the exchange on insider dealings in its shares.

Money flow and other momentum tools were up, presenting buy opportunities for market players who understand the importance of buying low and selling high in any market condition in the midst ongoing volatility and buying sentiment. As index is heading strong resistance levels of 98,932.46 basis points and 98,987.42ps to sustain uptrend, thereby creating the perfect setup for high probability of continuation to catch end of year repositioning at the right price. Also, as the index trades above the T-line and the two moving averages of 50-EMA and 50-SMA, this indicates relatively strength in the midst of changing market fundamentals and technicals on the NGX and the economy.

Technically, the NGX is on a markup phase in the midst of recovery, as candlestick formation and momentum indicators reveal strength in the market. As ADX is looking down to read 22.14 points, while RSI and Money Flow Index were up at 62.87 and 64.91 points against the previous session’s 59.90 and 60.01 points respectively. Consequently, market players should watch this current trend and trade wisely in the face of funds entered the market on a buying sentiment in some sectors and position taking in others on a daily time frame. Also, trading volume pattern continued to oscillates, suggesting buying interest and selloffs in the market amid players revaluing the market and economic events in the face of policy direction of the government that look inconsistent.

To navigate the rest of this year and beyond profitably, running with economic events, fundamental and technical analysis, 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 on Thursday inched up to continue its oscillation, trading at $73.54 per barrel in the midst of China increasing oil importation and expected US rate cut. Even as OPEC delay production hike in the face of ongoing geopolitical tensions in the Middle East and Russia war with Ukraine. As US President-elect tariff threats its trade’s partners and global economy outlook.  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.

Thursday’s trading started in the upside and it was sustained throughout session, on accumulation of blue chip companies and others stocks.  This situation pushed the NGX’s index to an intra-day high of 98,766.00bps from its lows of 98,500.57bps, before closing above its opening level at 98.760.59bps.

Market technicals were positive and strong with higher volume when compared to the previous session in the midst of breadth favoring the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 98% buy position and 2% sell volume. The total transaction volume index stood at 0.91 points, just as impetus behind the day’s performance was relatively strong as Money Flow Index inched up to read 64.91pts, from the previous day’s 60.01pts, indicating that funds entered the market.

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Index and Market Caps

At the end of Thursday’s trading, the composite NGX All-Share Index  gained 205.91 basis points, closing at 98,760.59bps from 98,509.68bps, representing a 0.25% up, while market capitalization rose by N152.bn, at N59.87tr from the previous day’s N59.72tr, representing a 0.25%  value gain.

Attention: If you have not signed up for INVESTDATA’s buy and sell signal setup, don’t delay, because the number of stocks entering their oversold range has increased as market correction and volatility call for intelligent trading 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.

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The upturn was driven by buying interests in the shares of Conoil, Wapco, Oando, PZ, Custodian, Golden Breweries and Tantalizer, among others. This impacted positively on Year-To-Date gain as it inched up to 32.08%, while Market capitalization gain stood at N15.43tr, representing 46.23% growth over its opening level for the year.

Bullish Sector Indices

Sectoral performance indexes were up, except for the NGX Banking that closed 0.22% lower, while the NGX Oil & Gas led advancers after gaining 2.67% followed Insurance, Industrial and Consumer goods with 0.82%, 0.62% and 0.32% respectively.

Market breadth turned positive, as gainers outnumbered losers in the ratio of 30:21, while activities in volume and value were up after investors exchanged 489.65m shares worth N7.06bn. Volume was driven by trades in  FCMB, Etranzact, Hmcall, Japaul Gold and NSLTech.

Tantalizer and Conoil were the best performing stocks, gaining 10% each, closing at N1.76 and N387.20per share respectively on the back of sentiment and market forces respectively. On the flip side, Daarcomm and Caverton lost 8.47% and 8.16% respectively, closing at N0.54 and N1.80per share, purely on profit taking and selloffs.

Market Outlook

We expect volatility to continue amid profit taking, as bargain hunters position, while rebalancing their portfolios midst profit taking, low valuation 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.

NB: Trading closed positive again on Friday at 99,378.28bps, after the 617.69bps or  0.6% rise in the NGXASI on the back of the 10% gain by each of Aradel, Caverton and Ikeja Hotels.

Ambrose Omordion

CRO|Investdata Consulting Ltd

info@investdata.com.ng

ambrose.o@investdataonline.com

ambroseconsultants@yahoo.com

08028164085