Expect Last Minute Rebound On Year-end Realignments
Market Update for December 29
Trading activities on the Nigerian Exchange reopened at the midweek closed on a negative note as selloffs and profit booking hit high and medium cap stocks, halting gains of the previous session, and ahead of year-end window dressing and repositioning of portfolios for the New Year.
Despite the seeming surge in volume traded, when compared to the volume recorded on Friday, it remains less than average in the midst of a positive breadth and selling sentiment as revealed by trade metrics for the session. As mentioned previously, the prevailing low traded volume and mixed sentiments that has turned the positive historical trends and patterns for the month of December in the opposite direction.
The NGXASI has recorded a decline of 3.33% MontMonth-To-Date, while offering huge buying opportunities in value and dividend-paying stocks that had suffered losses within this period, but having strong prospects of growing their earnings in the future to support share prices and dividend payout. On Wednesday, two companies with September year-end, Neimeth Pharmaceuticals and Vitafoam released their corporate actions of 7 kobo and N1.50 dividends, representing 16.67% and 108.33% growth in their respective payouts, when compared to last year.
Technically, the NGX index’s action had further decline as revealed by the candlestick at the end of the day trading as investors vibes closed below the 50-Day Moving Average. Also, momentum indicators for the day were mixed, just as the ADX is reading 20.37, RSI below the 50 at 39.49 and Money Flow Index looking up at 43.42 points on the daily chart.
The continuation of this trend depends largely on the interplay of market forces and inflow of funds into the equity space as fixed income market yields direction remains unclear and flat. Post-Christmas holidays, trading opened slightly on the upside before pulling back for the rest of the session on selloffs in BUA Cement and MTNN, which pushed the NGX index to an intraday low of 41,745.37 basis points, from its highs of 42,295.21bps. Thereafter, the index closed below its opening point at 41,807.10bps.Market technicals were positive and mixed as volume traded was higher than the previous day’s in the midst of breadth favouring the bulls on a negative sentiment as revealed by Investdata’s Sentiment Report showing 89% sell position and 11% buy volume. The total transaction volume index stood at 0.50 points, just as impetus behind the day’s performance remained relatively weak. Money Flow Index was up at 43.42 points, from the previous day’s 38.40 points.
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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 to stimulate and re-track the economy to the path of growth and development.The session’s downturn was driven by selloffs in BUA Cement, MTNN, May & Baker, PZ, Honeywell, Ucap, FBNH and Oando, among others, which impacted negatively on Year-To-Date gain, as it reduces to 3.82%.
Market capitalization growth stood at N1.18tr YTD, representing a 3.62% Improvement on the year’s opening value.Bearish Sector Indices Performance indexes across the sectors were down except for the NGX Banking index that closed 1.41% higher, while the NGX Industrial Goods led the decliners, after losing 3.91%, followed by Energy, Insurance and Consumer goods with 0.52%, 0.24 and 0.16% respectively.Market breadth remained slightly positive as gainers outnumbered losers in the ratio of 17:16, while activities in volume and value terms were significantly up as investors exchanged 180.18m shares worth N1.48bn, compared to the previous day’s 111.84m units valued at N911.92m.
Volume was driven by trades in Jaiz Bank, UBN, UACN, Transcorp and Sovereign Trust Insurance. UBN and Royal Exchange Assurance were the best-performing stocks after gaining 9.91% and 9.09% respectively, closing at N6.10 and N0.84 per share respectively on merger and acquisition, as well as market forces. On the flip side, BUA Cement and May/Baker lost 10% and 9.98% respectively, closing at N67.5 and N4.06 per share, purely on profit taking.Market Outlook
We expect last minutes rebound on year end window dressing and repositioning in dividend paying stocks as 2021 Q4 and full year unaudited earnings reports start rowing in any moment from next week. Just as two companies that made their corporate actions available to the market grew their dividend payout to reflect the numbers posted. Also, inflow into equity space is looking up slowly on changing investment decision to keep this trend ahead of new year holiday.
As market players digest economic data and happenings in fixed income market after the NGX index action retraced to trade above its 50-Day Moving Average on a low buy volume in the face of assets rebalancing and seasonality likely to influence stock prices ahead of year-end window dressing.The relatively low volume traded in the midst of retracement is creating new buy opportunities on the strength of the Q3 numbers. Also, candlestick formation and volume traded during the session revealed that institutional players are not buying yet.
It is equally noteworthy that during a ranging market many players seat on the fence waiting for a breakout or down before jumping into any position. Even as many stocks are trading within their buy ranges, a situation expected to attract more funds into the stock market, given the Dividend
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