Expect Mixed Trend, Sentiment On Profit-Taking, As NGX Eyes 48,000bps In New Week

Market Update for the Week Ended November 25 and Outlook for Nov 28-Dec 1

Equity prices on the Nigerian Exchange closed higher last week amid mixed sentiments and sustained positive momentum, and price appreciation by highly capitalized stocks that weighed on the benchmark NGX All-Share Index positively, following which it recorded a five stars’ soldier candlestick formation trend on a relatively low traded volume. Also, there was increased buying interest across major sectors of the market on positive market breadth in a week when the National Bureau of Statistics (NBS) also released the all expected Q3 GDP data that confirmed the slower 2.25% growth, extending the three consecutive quarters of decline since the last Q4 2021, when compared with 4.03% in the same period in Q3 2021.

The last full trading week of the month extended its strong momentum for the second successive weeks, thereby strengthen the recent rebound on the NGX, while practically ignoring the latest 100 basis points rate hike by the Central Bank of Nigeria (CBN) that raised the Monetary Policy Rate to 16.5%. Over the last six months, the CBN, in its bid to check inflation has so far raised the benchmark Monetary Policy Rate by 500 basis points from 11.5% to 16.5% across four consecutive meetings. We note that investors have already factored in the ongoing adjustments before now, as seen in the weeks of drops in equity prices in five straight months, beginning immediately after the first rate hike in May from 11.5% to 13%. Market players have also continued to digest the latest weak economic growth data released by the NBS, confirming the impact of the negative aggressive rate hike by the CBN. This has been made worse by the policy mismatch by the government’s economic managers amid the changing economic and political space.

Buying patterns during the week suggests that funds entered the market, notwithstanding the low transaction volume that is yet to confirm the presence of institutional investors, given that the NGX index has technically sustained its rally, as revealed by the trend and momentum indicators. However, it is still below the 50-Day SMA and the upper bearish channel line, despite breaking out the T-Line and 50-Day EMA on a weekly time frame. At this point, a breakout of the 50-day SMA may trigger the possibility of institutional investors’ entrance to the market ahead of year-end seasonality and corporate actions in 2023.

Also, profit-taking is underway after the market had rallied for six straight sessions in two consecutive weeks resulting in an 8.47% month-to-date gain, despite investors’ continued realignment of portfolios on the strength corporate earnings and expected Santa Claus rally. Also, players are viewing all of these against the backdrop of the rampaging inflation as they hedge against the rising inflation in some stocks with high dividend yields and strong earnings to support higher payout as financial year end of many companies draw closer.

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.”

As oil price continues its oscillation, pulling back to trade at $81.06 per barrel, after crude prices have fallen on the increasing bearish news ranging from Russia oil caped, Covid 19 cases in China on increase, geopolitical tension and fear of recession as a result of high interest rate and inflation across the globe. Also supply tighten due to the Russia-Ukraine war that has been lingering.  The up and down movement of oil price also continues to drive volatility across the globe.

Movement Of NGXASI

The NGX had a bullish week with a five-star, extending the market’s positive sentiment for two trading weeks on increased buying interests in blue chip stocks like telecoms giants- Airtel and MTNN, as well as Dangote Cement, among others that supported the upsurge, breaking out three psychological levels of 45,000, 46,000 and 47,000 on a relatively low traded volume for the period.

The week’s trading opened on a position note, extending the previous session’s gain by 0.47%. This was sustained Tuesday and other trading days of the week with 0.60%, 2.90%, 0.81% and 2.04% respectively, bring the week’s total gain to 6.88%, compared to the previous week’s 1.22% gain.

Subsequently, the benchmark NGX All-Share Index gained 3,061.61 basis points, closing at 47,554.34bps, compared to the week’s 44,492.73, ps opening level, after touching an intra-week high of 47,562.29bps and a low of 44,492.73bps. Market capitalisation also rose by N1.67tr, representing a 6.88% appreciation in value during the week, as it closed at N25.90tr, from the previous week’s N24.23tr,

The advancers’ table for the period was dominated by low, medium and high cap stocks, amid buying sentiment in blue chip companies, despite the low volume and volatility, as portfolio repositioning continued. Also notable is the fact that investors are taking advantage of the low prices to buy into value and high dividend yield companies as the rebound on a bullish divergent. Market metrics indicate a positive breadth as gainers outnumbered losers in the ratio of 49:19 on a buying pressure as reveal by investdata sentiment report showing 100% ‘buy’ volume and 0% sell position. Money Flow Index looking up to 22.71bps, from the previous week’s 16.04 points, an indication that funds entered the market on a weekly chart to reflect position taking across the major sectors and individual stocks.

 The NGX index’s action had a golden crossover of the T-line and 50-Day EMA during the week to form a double tops that signaled profit taking or continuation of trend on a positive breakout that needs confirmation on Monday as the market opens. We note that the volume that supported this rebound and rally remain weak and below the market’s traded average, just as corporate actions and year-end seasonality could support an uptrend.

 Bullish Sectoral Indices

Sectorial performance indexes for the week were in green, save for the NGX Oil/Gas that closed 1.29% lower, while the NGX Industrial goods led the advancers after gaining 9.45%, followed by Insurance, Banking and Consumer goods with 5.06%, 3.06% and 0.15% respectively.

Transactions in volume and value were up, as investors exchanged 711.62m shares worth N15.34bn, compared to the previous week’s 694.38m units valued at N8.67bn, with volume driven by Financial Services, conglomerates and ICT. Specifically, the week’s volume was driven by trades in Transcorp, Aiico, Zenith Bank, Accesscorp and MTNN.

Nigerian Breweries and Sovereign Trust Insurance were the best-performing stocks during the week, gaining 18.68% and 15.67% respectively, closing at N48.95 and N0.28per share on corporate action and market forces. On the flip side, Nestle and Capital Hotel lost 20.67% and 10% respectively, at N963.90 and N3.06per share, purely on profit taking and selloffs.

Outlook for the week

We expect a mixed trend and sentiment on profit taking after NGX index had formed a double top on a weekly time frame. Even as it eyes 48,000 psychological level in the new week, Just as retracement to 47, 000 mark and below is possible on selloffs as events unfold globally and domestically here in the midst of  interim dividend payment dates and bargain hunting as players continue to digest and position for full year financials.

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Theme: Preparing For Financial Market Reset In 2023 & Beyond

Sub-Topics

1, Budget 2023, Economic Headwinds & The Stock Market: Are Market Players Prepared? Mr Olatunde Amolegbe, CEO, Arthur Steven Asset Management Ltd & Immediate Past President of CIS

  1. Comprehensive & Complete Wealth Building Actionable Strategies for 2023 Mr Oladipo Ajayi Head of Fixed Income at Chapel Hill Denham
  2. 2023 Stock Market Outlook And Identifying Great Value Stocks For Santa Claus & Post-Election Rally Alhaji Garba Kurfi MD/CEO APT Securities & Funds Ltd)
  3. The Power of Technical Tools In Today’s Volatile Market Mr Rotimi Olubi. MD ARM Securities Ltd
  4. Building Recession-Resistant Portfolios In A Financial Reset Mr Muktar Mohammed, MD Muktar Finance Ltd
  5. The Role of Commodity Trading In Wealth Creation, Agricultural Development
  6. Fixed Income Market Slice & Dice In A Changing Interest Rates, Inflationary Environment Mr Teriba Adeboye, MD/CEO, Qualinvest Capital ltd

8, Four Steps To Simplify Your Day Trading & Understanding the power of Breakout Trades Mr Abdul-Rasheed Oshoma Momoh, Head Capital Market at, TRW Stockbrokers Ltd

9, 10 Golden Stocks for 2023,  Mr Ambrose Omordion, CRO. Investdata Consulting Ltd.

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Looking at history, there is no doubt that a correction or rebound is on the cards at some stage over the coming months. However, this big questions on everybody’s lips include when this will occur and whether it will end this bull-run or market recovery. Whatever happens, what is the best way to Prepare rather than trying to Predict? This and more, are what Invest 2023 Summit will address.

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Ambrose Omordion

CRO|Investdata Consulting Ltd

info@investdata.com.ng

ambrose.o@investdataonline.com

ambroseconsultants@yahoo.com

Tel: 08028164085, 08179547605

 

As a trader and investor looking to pull money out of the market regularly, the only thing you are really looking for is the price of the investment you bought or sold-short to move in your favor. So, common sense tells us that “Only Price Pays,” not news, not how much we love a stock or commodity. If the price does not move, you do not make any money, period.

If price movement is what pays us, then it’s only logical that we focus mainly on the price. Most indicators are based off of price, so they lag the last traded price for an investment. Some indicators, like the 50-day moving average, which many traders use, are actually lagging that investment by 50 days.

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