Expect Mixed Sentiments, Trend Still On Profit Taking, Portfolio Reshuffling Ahead Year-end Seasonality

Market Update for December 5

Stock prices on the Nigerian Exchange followed through on Monday, sustaining a three-week bullish transition, despite the profit taking that hit the banking tickers which rallied recently, as well as utility stocks, among others. This was just as the buying interest across some major sectors of the market supported the strong momentum in the midst of positive market breadth and mixed sentiment to start the first full trading week of December on a positive note.

The NGX index’s action traded above its strong support level of 47,660 basis points on a very high volume and uptrend, even as the index is moving higher to forming a topping pattern that could suggests another correction in the face of trending market. Also, as the 2023 corporate action draws closer with prevailing high dividend yields across the equity space, we expect position taking ahead of the full-year earnings season to continue on bargain hunting, speculation and price appreciation of highly capitalized stocks, weighing on the general market performance amid a high volatility.

This, therefore, created opportunities for discerning investors and traders to buy the dip, especially in the companies with a consistent track record of dividend payment with strong fundamentals and growth prospect that will support further price and payout.

Technically, the market is on its markup phase, setting the stage for another uptrend after forming a cup and handle chart pattern on a daily time frame. The oscillation in the first trading day of the week, due to profit taking and portfolio repositioning, as revealed by momentum indicators for the day which were strong.

Specifically, the ADX rose to 48.04, RSI at 75.06 while Money Flow Index is looking up to read 94.22 points on the daily chart. The continuation of this trend depends largely on the interplay of market forces and inflow of funds into equity market as trading open this morning. Market players continue to digest the mixed macroeconomic data and company fundamentals in the midst of year-end seasonality and expected 2023 unaudited accounts in January, alongside the election uncertainty.

The seeming high traded volume suggests the gradual return of many players who had been seating on the fence before now, including institutional investors holding cash to confirm the primary’s market direction, especially given the anticipated financial market reset in 2023, and beyond expected to create wealth for action takers are underway.

To navigate the rest of the year profitably using fundamental and technical analysis to run, join investdata live sessions at noon every 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 low volume of transaction witnessed, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.”

Oil price oscillation continued, trading at $83 per barrel, as China enters another phase of Covid crisis after the protest, Russia’s oil price caped kicks off in the midst of Saudi cutting production, geopolitical tension and fear of recession as a result of high interest rate and inflation across the globe. Also, supply tightened due to the Russia-Ukraine war that has been lingering. The up and down movement of oil price also continues to drive volatility.

Meanwhile, Monday’s trading opened slightly upside and was sustained throughout the session, despite profit taking in the banking stocks and others, a situation that pushed the NGX’s index to an intraday high of 48,373.03bps from its lows of 48,154.65bps before closing above its opening level at 48,270.23bps.

Market technicals were positive and mixed, with higher volume of trade than the previous session in the midst of breadth that favored the bulls on mixed sentiment as revealed by Investdata’s Sentiments Report showing 53% buy position and 47% sell volume. The total transaction volume index stood at 1.09 points, just as momentum behind the day’s performance was strong as Money Flow Index was looking up at 94.22 pts, from the previous day’s 89.16pts, indicating that funds entered in the market.

For you to successfully invest and trade in this volatile market, order for Investdata’s video on Buy & Sell Technical Analysis Toolbox to navigate the volatile market profitably, enhance trading decisions and boost your bottom line. Also, to up your game in stock trading and investing, understanding the key to trading price and index action will go a long way to make the difference in your trading results, check out the video materials below.

Index and Market Caps

At the end of Monday’s trading, the benchmark NGX All Share Index gained 115.58 basis points, closing at 48,270.23 basis points after opening at 48,154.65bps, representing a 0.24% up, just as market capitalization rose  by N62.76bn closing at N26.29tr from the previous day’s N26.23tr, which also represented a 0.24%  appreciation in value.

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 buying range has just increased to 30 as they build a new bullish base and positive chart patterns to be on our watchlist. These stocks have double the potentials to rally, considering their earnings prospects and the oscillating moves in a recovery market and economy.

To become a member, send ‘YES’ or ‘STOCKS’ to the phone numbers below. 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 that can stimulate and re-track the economy to the path of growth and development.

The day’s upturn was driven by position-taking in Presco, Guinness, Eterna, BUA Cement, Africa Prudential, Mansard, Caverton and Linkage Assurance, among others, which impacted positively on Year-To-Date gain, increasing it to 13%. Market capitalization gain YTD stood at N3.45tr, representing a 18.08% rise over the opening level for the year.

Bullish Sector Indices

Sectorial performance indexes closed green, save for NGX Banking that closed 1.29% lower, while the NGX Industrial goods index led the advancers after gaining 1.66% followed by Insurance, Consumer goods and Energy with 1.05%, 0.63% and 0.59% respectively.

Market breadth was positive, as gainers outnumbered losers in the ratio of 19:16; just as activities in volume and value were mixed with investors exchanging 185.11m shares worth N4.19bn. Volume was driven by trades in FBNH, Zenith Bank, Trancorp, GTCO and Lafarge Africa.

Guinness Nigeria and Eterna were the best performing stocks, after gaining 10% and 8.78%, closing at N69.30 and N6.44 per share respectively on market forces and year end positioning. On the flip side, Geregu and SCOA lost 9.85% and 9.43% respectively, closing at N110.70 and N0.96 per share, purely on profit taking and selloffs

Market Outlook

We expect mixed sentiment and trend to continue on profit taking and portfolio reshuffling ahead of year end seasonality in the face of election uncertainty, as pullbacks add more strength to upside rebound, so investors should take advantage of price correction ahead of year end seasonality. Also looking at the trends and events across the globe and domestically.

Ambrose Omordion

CRO|Investdata Consulting Ltd




Tel: 08028164085, 08179547605