Market Update for the Week Ended November 15 and Outlook for November 18-22
Trading on the Nigerian Exchange last week was positive thereby halting previous weeks of bearish momentum and downtrend in the midst of negative macroeconomic indices that points to the possibility of a contraction. This reflected the impact of high interest rate regime by the Central Bank of Nigeria (CBN) which failed to checkmate the runaway inflation rate of 33.88% at the end of October. Also, the Federal Government’s economic reform policies are yet to usher in real recovery and path of growth as a result of mismatch policies of fiscal and monetary authorities.
Meanwhile, the government, last week approved plans to propose a national budget of N47.9tr for the 2025 fiscal year, without the usual practice of updating Nigerians on the implementation or execution level of the current 2024 budget. Such performance update could have offered an insight into how the supplementary provisions helped to better the economy and the wellbing of Nigeria today.
The NGX rebounded last week amid buying sentiments, sector rotation and continued portfolio reshuffling ahead of year-end. However, the low traded volume signals the absence of institutional investors or smart money as they are still studying the latest quarterly earnings of many companies that posted impressive numbers.
The pullbacks and fundamentals of the various stocks reveal inherent value, attracting market players to buy into cheap stocks with strong high upside potentials. So, a better understanding of the big picture of the market and the seasonality trends in any market cycle would determine your returns ultimately, hence the need to position in the right stocks, sectors and industry at the right price in this season of volatility that comes with year end sentiment makes the difference.
Technically, the market has signaled a reversal on a daily and weekly chart, which needs confirmation in the new week ahead of CBN policy meeting. As NGX index action trades flat on the T line and above the two moving average of 50 SMA and EMA on a weekly time frame. The sentiment report for the period revealed a buying sentiment of 100% sell position and 0% buy volume, as MFI looked slightly down to reads 55.88 points which indicates that funds left the market for the period. Despite the positive outing that reflected in the expansion of market breadth for the week occurred in the midst of position taking. As portfolio rebalancing persisted, while bargain hunters took advantage of pullbacks to buy into fundamentally sound companies with high yield, strong earnings power and low valuation.
To navigate the rest of Q4 market volatility and its mixed outlook profitably using fundamental and technical analyses to run, join Investdata’s Live Sessions at noon every Monday, Wednesday and Friday. Also, get investdata’s 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 corrections and pullbacks to continue the accumulation phase. As volume of transaction witnessed within the week remain low, it is time to go shopping for undervalued stocks, sector rotation and the next insider dealing opportunity.
Oil prices for the week dropped by 4% to trade at $71.59per barrel following increased policy uncertainty of Trump, weak demand outlook and uptick in US inventory. Even as Saudi plans to reduce supply of oil to China low production capacity in the midst of conflict in the middle East and war in Ukraine and Russia disrupting oil output in the face of major central banks of the world cutting rates to trigger economic expansion across the globe. The up and down movement of oil price has continues to drive volatility across different investment windows and inflation that is slowing down in mature economies.
The global stock markets witnessed a negative outing in the period under review on mixed economic data and fed caution to rate cuts after reducing rate by 75bps. As GDP figure release and post election dynamics weighed on the MSCI world equity index to close lower 2.2% for the period. Reveraling negative sentiment across major markets. In the new week, we expect trading activities to be volailite, due to economic data and inflation reports from the UK, Enrozone, Japan and others, coupled with expected corporate earnings, geopolitical tensions and Trump political appointment of cabinet.
Movement Of NGXASI
It was a bullish week for the NGX in the midst of buying pressure and negative economic data, with the market recording three trading sessions of up market and two days of dowm market on a low traded volume and positive market internals in the face of sector rotation during the period.
Trading for the week opened on a positive note, extending the previous gain when the index closed 0.14% higher on Monday. This trend was shortlived on Tuesday when the market pulled back by 0.12%. NGX rebounded at midweek by 0.22% on buying interest in financial stocks and high cap companies, but suffered lost of 0.19% on Thursday before retracing up on Friday by 0.50% on position taking across the major sectors of the market. This brought the week’s total gain to 0.50%, compared to the 0.20% negative outing in the previous week.
Consequently, the composite NGX All-Share Index inched up by 486.09 basis points, closing at 97,722.28bps, from previous week’s 97,236.19bps closing level, after touching an intra-week high of 97,725.64bps from a lows of 96,857.60bps. Market capitalisation rose by N295 billion to close at N59.22tr from N58.92tr which represented 0.50% appreciation in value. Despite price adjustment of Berger Paints, NNFM, Seplat Energy and Okomu Oil for interim dividend of 20kobo, 50 kobo, N60.53 and N2.00 respectively.
The advancers’ table for the week was dominated by medium and low priced stocks in the midst of buying sentiment and portfolio reshuffling ahead of year end accumulation. Also notable were low transacted volume and absence of smart money.
Market technicals for the period were weak and mixed as revealed by volume and market breadth, with losers outnumbering gainers in the ratio of 46:39 on a buying sentiment as indicated by investdata sentiment report showing 0% ‘sell’ volume and 100% buy position. Money Flow Index was looking down to read 55.88points from the previous week’s 57.29 points, an indication that funds exited the market on a weekly chart.
Technical View
The NGX index’s action halted its downtrend and pullbacks, reversing to signal returing of strength and position taking ahead of year end seasonality and sentiment, after many stocks had witnessed correction following a mixed sessions. Reversal or continuation of trend at this points depends on market forces and sentiment in the new week, as market palyer disgest consumer price index reports for October. As sector rotation continue on the strength of numbers from the banking, insurance, agribusiness, services, oil and gas sectors. Buying sentiment hit some blue chip companies in the face of low valuation that revealed high upside potential.
Mixed Sectoral Indices
The sectoral indexes of the week were mixed as the NGX Energy and Industrial goods index closed 0.29% and 0.20% lower respectively, while NGX Banking led the advancers after gaining 2.32% followed by Insurance and Consumer goods with 1.17% and 0.60% respectively.
Activities in volume and value were down, as players exchanged 1.48bn shares worth N38.88bn, compared to previous week’s 6.47bn units valued at N75.75bn. Volume was driven by Financial Services, Oil/Gas and Consumer goods industry, boosted specifically by Accesscorp, Ucap, UBA, Oando and GTCO.
John Holt and Eunisell were the best performing stocks during the week, gaining 60.50% and 46.22% respectively, closing at N7.72 and N11.99 per share on market sentiment and forces. On the flip side, Daar Communication and Onado lost 12.12% and 10.44% respectively, at N0.58 and N62.65 per share, on selloffs and profit taking.
Outlook for the week
We expect a mixed sentiment, as investors digest October CPI data ahead of CBN policy meeting in the face sector rotation and portfolio rebalancing. As players take advantage of pullbacks to buy into value stocks. As investors are watching with rapt attention.
However, retracement to the 96,000bps level and below is possible on correction as global and domestic events unfold.
Take Action
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- How To Navigate The Alternative Markets To Grow Your Portfolio in 2025, by AlhajiGarba Kurfi, MD/CEO APT Securities & Funds Ltd
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- 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
