Market Update for the Week Ended November 26 and Outlook for Nov 29 – Dec 3
The month of November is gradually winding down on a positive note, despite the high volatility to usher in the last month of the year that is highly characterized by seasonality, historical trends and patterns that suggest a strengthening bullish move in December. The period under review had a mixed performance that reversed the previous down market on the strength of buying interests in blue chips and highly capitalized stocks on a less than average traded volume, despite the negative market breadth for the week.
The market volatility and sideways trending in the week before rebounding on Friday, suggest that many players were watching out for the outcome of the Monetary Policy Committee meeting, being the last one for the year 2021. Members of the committee, however, voted as expected, just as all eyes were on the TB primary market auction rates with the long tenored rate further declining to 5.89% from 6.50%, while the bond market is yet to give a clear direction of yields in the fixed income environment. Knowing the power of the circular flow of funds in the financial market is key, especially at this time of positioning for the Santa Claus rally, end of the quarter, and year window dressing ahead of the 2021 full-year earnings season in Q1 2022. These seasonal activities and corporate actions in 2022 are expected to influence stock prices positively, depending on market liquidity and events that unfold.
Already, Q3 numbers have given discerning investors and traders an insight into what should be expected at the end of this current financial year-end, especially for companies with December as year-end. This is especially true of those with earnings trending up and traded volume also in that direction with other positive technicals that point to higher upside potential. As the market cross to December 2021, Investdata sees a solid bull-run or uptrend, except something happens to disrupt these expectations and general historical trends.
The less than average traded volume, during the week, is an indication that institutional investors are not selling, rather they are taking position gradually and the volume that took the market up is still very intact. The light volume on the buying activities shows that retail investors like you and I are the ones jumping into position.
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Movement Of NGXASI
The NGX index action for the week recorded a mixed trend and performance of two sessions upmarket and three days down market to finish the period higher on mixed technicals, positive economic data, and improving market liquidity, going into the month of seasonality. Trading for the week started slightly on the upside on Monday, before side trending on Tuesday, Wednesday, and Thursday as the composite NGX All-Share index lost 0.01%, 0.02%, and 0.34% respectively, but rebounded sharply on Friday, gaining 0.46% on improved traded volume, following the increased buying interests in telecoms giant- Airtel Africa, that brought the week’s cumulative gain to 0.25%, compared to the previous week’s 0.12% loss.
Consequently, the composite NGXASI chalked 109.02 basis points, closing at 43,308.29bps, after touching an intra-week high of 43,334.93bps from its lows of 43,069.97bps, as the week’s opening figure was 43,199.27bps on positive sentiments and buying interest in bellwethers stocks. Market capitalization during the period rose by N104bn, closing at N22.60tr, compared to the previous week’s N22.54tr, which also represented a 0.25% value gain.
The top advancers table for the week was dominated by low and medium cap stocks in the midst of profit-taking and buying sentiments as bargain interests in University Press, Honeywell, FBN Holdings, GSK, and Airtel Africa. These followed investors’ position ahead of the 2021 financial year-end dividend on the strength of the nine-month financials and positive economic data. During the week also, the share price of Aiico Insurance was adjusted for the bonus issue announced by the board.
Market breadth was negative during the week in the midst of the less than average traded volume and buying sentiment that is likely to continue after the MPC meeting was in line with market expectation, this week. Decliners outnumbered advancers in the ratio of 49:28, on positive sentiment as revealed by the investors’ sentiment report showing a 90% buy volume and 10% sell position. The Money Flow Index was down at 70.76bps from the previous week’s 77.28 points, an indication that funds exited the market.
NSEASI WEEKLY CHART MOVEMENT
The NGX index’s action, on a weekly chart, remains above its 20 and 50-Day Moving Average to sustain a bull-trend, despite the sideways movement as a result of profit-taking, as it resisted decline after testing the 43,069.97bps strong support level on a less than average traded volume that indicates indecision among players. The candlestick pattern at the end of last week revealed a gradual return of strength on bargain hunting, even as the index action is set to retrace up, depending on market sentiment in the new trading week that usher in December will support an uptrend. However, all eyes are on the fixed income market yields and oil prices that should further support market fundamentals to attract liquidity to the equity space.
University Press and Ikeja Hotel were the best-performing stocks for the period after gaining 27.80% and 17.4% respectively, closing at N2.94 and N1.35 per share respectively on market forces. On the flip side, Aiico and UPDC lost 44.44% and 14.94% respectively, at N0.70 and N1.31per share, on price adjustment for script dividend and selloffs.
Outlook for the week
We expect a mixed trend and sentiment to continue on positive economic data and repositioning for the 2021 financial year dividend in the new year, as bargain hunters continue to take advantage of price correction in fundamentally sound stocks to buy in. It is also noteworthy that foreign investors, fund, and portfolio managers continue to take a position on Q3 numbers ahead of 2022 corporate actions. For now, many stocks remain in their buy range to attract funds into the equity space. Also, investors will continue tracking yields movement in the fixed income market. Also, investors are still observing the interplay of forces in the FX market as exchange rate in the back market continues to decline. Last week’s above-average volume suggests that institutional investors are not selling. It is noteworthy that oil price continues to oscillate as it trades above $81 in the international market; corporate actions, as well as the interim dividend possibilities, are around the corner.
Invest 2022 Traders & Investors Summit
Theme: Master The Market, Get The Best Of Pre-Election Year 2022
1. Balanced Trading: Playing Nigeria’s Multiple Exchanges For Diversification, MrOlatundeAmolegbe, CEO, Arthur Steven Asset Management Ltd &President of CIS
2. Agriculture, Economic Recovery & Diversification: Where Is Commodity Trading In Your Portfolio, MrAkinyinkaAkintunde, Business Development Manager, AFEX Commodities Exchange Ltd.
3. Technical Outlook & Indicators For Profitable Market Timing, Mr Abdul-Rasheed OshomaMomoh, Head Capital Market at, TRW Stockbrokers Ltd
4. Benefits & Dangers Of Fixed Income Instruments In An Inflationary Environment, MrTeribaAdeboye, MD/CEO, Qualinvest Capital ltd
5. Economic Outlook and implications of the N16.45 Trillion 2022 Budget On Sectors/Stock Market, MrOluwasegunAkinwale, Senior Portfolio Manager,Coronation Asset Management Ltd
6. Profitable Stock Picks Made Easy, Using Fundamental Tools, Mrs. Ebiere Helen Fumudoh, MD/CEO, Norrenberger Securities Ltd
7. The Role of Real Estate & REIT Instruments In the Ecosystem, Mr Tope Ojo, Managing Partner,Tope & Tunde Estate Surveyors &Valuers
8. Trade Opportunities & 10 Golden Stocks for 2022, Mr Ambrose Omordion, Chief Research Officer, Investdata Consulting Ltd
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D. How to take advantage of the circular flow of funds in financial markets
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Tel: 08028164085, 08179547605