Market Update for November 11
Trading activities on the Nigerian Exchange opened the week positive, extending the bullish momentum and recovery for a third successive session on buying interests in highly priced stocks and some blue-chips. This pushed the composite NGX All-Share index higher on a low traded volume and negative market breadth, even as breadth contraction indicates mixed sentiment in the face of buying interests in Aradel Holdings and some medium cap stocks. Also, high volatility and sector rotation continued on the strength of Q3 numbers and insiders dealings as announced on the exchange by the different companies.
The markup phase and uptrend are signals that the exchange is presenting buy opportunities for discerning investors and smart traders that understand the important of buying low and selling high in any market condition. This is particularly true now that many stocks on the NGX are undervalued with high upside potentials, while market players digest the recently submitted quarterly earnings reports that reveal the states of various companies on the NGX. Already, many companies reported better-than-expected 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 NGX index has formed a top chart pattern at the end of Monday’s trading that signals reversal and profit taking in need of confirmation as trading opens on Tuesday. This retracement from strong resistance level of 97,548.03 basis points and 97,666.35bps, after forming a topping-tail and hammer candle in an uptrend. This created the perfect setup for high probability of pullback to catch end of year repositioning. Also, the index trading flat on the T-line and below 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 larger economy, as business activities continued to contract as revealed by October PMI that reads 46.9 points according to Stanbic IBTC reports
Technically, the NGX is on an uptrend in the midst of profit taking and buying interests, as transaction volume slowed down to signal the absence of smart money in the market. Candlestick formation and momentum indicators reveal a somewhat weakness and strength in the market. The ADX is looking up at 23.07 points, while RSI and Money Flow Index were mixed to read 45.20 and 25.99 points against the previous session’s 43.41 and 28.86 points respectively.
Consequently, market players should watch this current trend and trade wisely in the face of funds leaving the market on a mixed sentiment in some sectors and profit taking in others. Also, trading volume pattern continued to oscillates, suggesting position taking and selloffs in the market amid players studying the corporate earnings and policy direction of the government that look confused.
To navigate the rest of this quarter and beyond profitably, running with 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 Monday slide to continue its oscillation, trading at $74.41 per barrel in the midst of tropical influence and China stimulus package below expectation. As policy uncertainty of Trump 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 started in the green and it was sustained for the rest of the session, on buying interest in high and medium cap stocks, despite profit taking in the market. This situation pushed the NGX’s index to an intra-day high of 97,548.03bps from its lows of 97,168.38bps, before closing above its opening level at 97,374.25bps.
Market technicals were weak and mixed with lower volume when compared to the previous session in the midst of breadth favoring the bears on a mixed sentiment as revealed by Investdata’s Sentiments Report showing 54% buy position and 46% sell volume. The total transaction volume index stood at 0.64 points, just as impetus behind the day’s performance was weak as Money Flow Index inched down to read 25.99pts, from the previous day’s 28.86pts, indicating that funds left the market, despite closing on a positive note.
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Index and Market Caps
At the close of trading, the benchmark NGX All-Share Index gained 138.06 basis points, closing at 97,374.25bps, after opening at 97,236.19bps, representing a 0.14% up. Market capitalization rose by N83.47bn, closing at N59tr from the previous day’s N58.92tr, representing a 0.14% value gain.
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Monday’s upturn was driven by position taking and buying interest in the shares of Aradel, Masnard, Flourmill, Cutstodian, BetaGlass, JohnHolt and NEM, among others. This impacted positively on Year-To-Date gain as it inched up to 30.22%, while Market capitalization gain stood at N14.89tr, representing 44.20% growth over its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed with the NGX Insurance and Energy indexes closing 0.23% and 0.16% higher respectively, while the NGX Banking led the decliners after losing 0.81%, followed by Consumer and Industrial goods with 0.10% and 0.03% respectively.
Market breadth turned negative, as losers outnumbered gainers in the ratio of 27:24, while transactions in volume and value were down after investors exchanged 297.83m shares worth N7.52bn. Volume was driven by trades in SterlingNG, UBA, Accesscorp, Flourmill and FBNH.
Enuisell and Aradel Holdings were the best performing stocks, gaining 10% and 9.99%, closing at N9.02 and N533.80 per share respectively on the back of sentiment and market forces respectively. On the flip side, Ucap and Sovereign Trust Insurance lost 9.78% and 7.25% respectively, closing at N16.15 and N0.64per share, purely on profit taking as Ucap credited investors’ bonus shares to their accounts.
Market Outlook
We expect mixed sentiments to continue on bargain hunting, profit taking and low valuation. 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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Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
08028164085
