Market Update for the Week Ended November 3 and Outlook for Nov 6-10

Nigeria’s equity market recorded a positive sentiment and outing in the month of October and week under review as investors react to the better-than-expected corporate earnings in the midst of the increasing macroeconomic headwinds and global geopolitical tension, thereby extending the bull run for the second consecutive week on improved traded volume and buying momentum.
Position taking by market players during the period increased as they rebalanced their portfolios on the strength of corporate earnings ahead of year end and last quarter seasonality. These impacted stock prices across the large cap, low priced and blue chip companies, which also reflected on the volume of transaction and positive market breathe for the week. All eyes are on expected macroeconomic reports such as the October consumer price index and Q3 GDP figures, among others which would help investors navigate the volatile market environment, amid rising yields in the fixed income space ahead of 2023 last MPC meeting coming up November 20 and 21.
As noted earlier November has started on a positive outing, extending the previous month’s bull transition, pushing the market higher while investors digest the impressive earnings and yields outlook in the fixed income space. Trade metrics revealed above average traded volume and buying interest as the composite index closed in the green. Historically, Investdata research shows that trading in the month of November has always been mixed, closing positive six times, according to an analysis of our 10-year market data.
It will also interest you to know that putting together all the six months of the year, the best six months’ window on the nation’s stock market performance is between November and April. The stock market, being a leading economic indicator, is already pointing to where the economy is heading, considering the robust corporate earnings of listed companies representing different sectors of the economy that were just made available to the exchange to guide investors decision and investment plan.
Since monetary policy and central banks decisions drive interest rates and yields in any economy, focusing on the circular flow of funds is very important, where is the liquidity moving to in the face of impressive corporate earnings, rising inflation, weak economic growth and devaluation of Naira on a daily basis. It is gladdening to note that the Central Bank of Nigeria (CBN) is making moves to settle the backlog of FX obligations and relatively improve supply in the exchange market, a situation that will help reduce pressure and the ongoing volatility in that segment of the financial market .
The NGX is trading above the T-line and 70,000 mark on a weekly and daily chart but below the upper trend line in a bullish channel amid buying interests in blue-chip stocks, which pushed the indicators higher in the midst of continued oscillation in transaction volume pattern. This further confirms accumulation as market players digest the recent earnings and looking forward to more corporate earnings in the new week. The seeming improvement in volume of transaction in the market is also an indication that smart money can mark-up the price at any time and without notice. These, notwithstanding, we urge investors to wait for confirmation of the trend, with bargain hunters already taking advantage of the low valuation and in the midst of markup and profit taking.
Meanwhile, market volatility continues to support technical traders in the midst of prevailing buying interest and mixed sentiments, resulting from portfolio rebalancing and sector rotation in the midst of the escalating war in the Middle East, and the better than expected earnings that signals the possibility of higher payouts at year-end. This is especially true of companies whose share price had pulled back in the midst of the strong numbers posted, which reveal their undervalued state. This can be seen in the high dividend yields that point to the possibility of bargain hunters taking position to hedge against the country’s soaring inflation.
To navigate the rest of the year market volatility and its mixed outlook 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 breakout of consolidation. As volume of transaction witnessed within the week remain above the average traded volume, it is time to go shopping for undervalued stocks, sectors and the next insider dealing opportunity.
Oil price during the week under review oscillated to trade at $87.48 per barrel in the midst of the ongoing middle east conflict and rate pause by the central banks, despite the seeming cooling inflation. We note also the rising geopolitical tensions across the globe and supply disruptions longer, due to the Russia-Ukraine war that has lingered for more than a year, and is indeed escalating. The up and down movement of oil prices also continues to drive volatility across different investment windows.

Movement Of NGXASI
It was a bullish week on the NGX, as the NGX All-Share index closed green in four trading sessions, and red once to finish higher. The buying sentiment reflected on the major sectors of the market as the indices moved northward due to position taking in the midst of portfolio repositioning and profit booking.
The week’s trading started on positive, extending the previous gains by 1.45%, a trend that was sustained on Tuesday and midweek when the index inched up by 1.65% and 1.94% respectively. This happened on the back of buying interests in Airtel and other stocks, before pulling back on Thursday by 0.0.76% due to profit taking and selloffs. The benchmark index retraced up on Friday, gaining 0.22%, bringing the week’s accumulated gain to 4.56%, compared to the previous week’s 0.33% positive position.
Consequently, the NGX All-Share index gained a significant 3,060.19 basis points, closing at 70,196.77bps, compared to the week’s 67,136.58bps opening level, after touching an intra-week high of 70,584.70bps and a low of 67,134.14bps. Market capitalisation also rose by N1.67tr, representing a 4.56% value gain for the period.
The top advancers’ table for the period was dominated by low, medium and large cap stocks amid the buying interest in highly priced stocks Airtel and BUA Cement in the face of high volatility. Also notable is the fact that investors are taking advantage of the price oscillation and low valuation to buy into value and high dividend yield companies.
Trade metrics for the period was positive as gainers outnumbered losers in the ratio of 63:29 on buying sentiments as revealed by investdata sentiment report showing 89% ‘buy’ volume and 11% sell position. Money Flow Index was looking flat at 71.61bps from the previous week’s 71.84 points, an indication that funds left the market on a weekly time frame, despite closing higher.

Technical View

The NGX index’s action breakout the consolidation range and resistance level of 68,485.18 to usher in a markup phase on the weekly chart with above average traded volume signaling positioning of institutional investors in the market now, while position trading is ongoing by investors, as the market trades above the T line on a daily and weekly time frame to sustained its uptrend in the midst of positive sentiment and buying momentum. We note also that the index is trading above the 50-day moving average on the weekly time frame.

Bullish Sectoral Indices
The sectorial performance indexes were in green, except for NGX Energy that closed flat, while the NGX Insurance led the advancers’ after gaining 7.96%, followed by Banking, Industrial and Consumer goods with 2.67%, 0.73% and 0.47% respectively.
Transactions in volume and value were up, as market players exchanged 2.45bn shares worth N40.57bn, compared to the previous week’s 1.45bn units valued at N25.42bn. Volume was driven by Financial Services, Oil/Gas and ICT Industry. The was boosted specifically by trading in Japaul Gold, UBA, Fidelity Bank, Chams and Transcorp.
Mutual Benefits Assurance and Japaul Gold were the best performing stocks for the week, gaining 29.27% and 28.28% respectively, and closing at N0.53 and N1.27 per share on market sentiments and earnings expectations. On the flip side, RT Brisco and Beta Glass lost 14%and 10.46% respectively, at N0.43 and N59.95 per share, purely on selloffs and profit taking.