Market Update for November 26
Tuesday’s trading on the Nigerian Exchange halted three consecutive sessions of pullbacks with a marginal gain, as a result of price appreciations by some mid and high cap stocks that pushed the composite NGX All-Share index up on a very high traded volume in the midst of slightly negative market internals and buying sentiment. The Central Bank of Nigeria (CBN) Monetary Policy Committee voted to further adjust the benchmark Monetary Policy Rate up by 25 basis points to 27.50% which hikes the cost of funds in an economy that is witnessing soft growth as revealed by the latest GDP. This is as inflation notched closer to 34%, even as forcing exchange rate and insecurity across the country continues to drive inflation further notch.
Meanwhile, investors and traders are rebalancing their portfolios in the face of the rate hike, just as the service sector remains the major driver of the Q3 GDP. We expect the mixed sentiment trend to continue due to selloffs and positioning ahead of year end seasonality and Santa Claus rally that had been a pattern and trend the market looks to in preparation of Xmas and New Year. The oscillating volume pattern and funds leaving the market and some individual stocks, signaled portfolio rebalancing in midst of expected correction and rally that comes with year-end and unaudited Q4 numbers in the first month of 2025. These should guide investors and traders as per where to buy, as the nation 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.
Meanwhile, the signaled reversal in a recovery market creates opportunities to buy low, as the index formed a bullish hammer chart pattern at the end of Tuesday trading that indicates uptrend which requires confirmation as trading opens at midweek. During the session, Notore Chemical Industries announced Scheme of Arrangement for minority shareholders. Oando notified NGX of its AGM, while Aradel Holdings and Ucap informed the market of insiders dealing. Money flow and other momentum tools continued to look down to present buy opportunities for bargain hunters who understand the importance of buying low and selling high in any market condition in the midst ongoing volatility.
The buying sentiment in the midst of expected retracement from support level of 97,477.80 basis points and 97,524.91ps to rebound, thereby creating the perfect setup for high probability of reversal or continuation to catch end of year repositioning at the right price. Also, as the index is still trading below the T-line and the two moving averages of 50-EMA and 50-SMA, this indicate weakness in the midst of changing market fundamentals and technicals on the NGX and the economy.
Technically, the NGX signaled reversal in the face of recovery and buying sentiment, as candlestick formation and momentum indicators reveal a somewhat weakness in the market. ADX looking up to read 27.89 points, while RSI and Money Flow Index were mixed at 48.35 and 36.48 points against the previous session’s 48.15 and 37.37 points respectively. Consequently, market players should watch this current trend and trade wisely in the face of funds leaving the market on a buying sentiment in some sectors and profit taking in others. Also, trading volume pattern continued to oscillates, suggesting buying interest and selloffs in the market amid players revaluing the market 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 Tuesday were steady to continue its oscillation, trading at $72.96 per barrel in the midst of Israel-Hezbollah ceasefire effect ahead of OPEC upcoming meeting on production policy 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.
Meanwhile, Tuesday trading slightly in the upside before pulling back to oscillates for the rest of the session on position taking in mid to large cap stocks and selloffs in other companies. This situation pushed the NGX’s index to an intra-day high of 97,678.14bps from its lows of 97,524.91bps, before closing slightly above its opening level at 97,639.88bps.
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 buying sentiment as revealed by Investdata’s Sentiments Report showing 75% buy position and 25% sell volume. The total transaction volume index stood at 1.21 points, just as energy behind the day’s performance was weak as Money Flow Index inched down to read 36.48pts, from the previous day’s 37.37pts, indicating that funds left the market, despite closing marginally up.
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Index and Market Caps
The benchmark NGX All-Share Index inched up by 23.61 basis points, closing at 97,639.88bps from 97,626.27bps, representing a 0.01% up, while market capitalization rose by N8.25bn, at N59.18tr from the previous day’s N59.17tr, representing a 0.01% value gain.
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The upturn was driven by position taking and buying interest in the shares of Wapco, GTCO, Stanbic IBTC, Dangote Sugar, Flourmill, Ucap, Zenith Bank and HMcall, among others. This impacted mildly on Year-To-Date gain as it inched up to 30.58%, while Market capitalization gain stood at N15.02tr, representing 44.6% growth over its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes were up, except for the NGX Banking index that closed 0.21% lower, while NGX Insurance index led the advancers after gaining 0.91% followed by Industrial, Energy and Consumer goods with 0.76%, 0.36% and 0.09% respectively.
Market breadth was negative, as losers outnumbered gainers in the ratio of 24:25, while transactions in volume and value were down after investors exchanged 552.11m shares worth N8.03bn. Volume was driven by trades in HMCALL,Tantalizer, UBA, Prestige Assurance and FBNH.
HMCALL and Sunu Assurance were the best performing stocks, gaining 9.98% and 9.80% respectively, closing at N6.17 and N3.81 per share respectively on the back of sentiment and market forces respectively. On the flip side, Multiverse and Tantalizer lost 9.92% and 9.30% respectively, closing at N5.90 and N1.17per share, purely on profit taking and selloffs.
Market Outlook
We expect mixed sentiments to continue as players digest Q3 GDP and rate hike of CBN in the midst of profit taking, bargain hunting, 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.
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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
