Expect Positive Sentiment On Profit Taking, Bargain Hunting, Ahead Of Jan. Effects, Q4 Earnings

Market Update for January 5

Profit-taking resurfaced on the Nigerian Exchange on Thursday after 13 successive sessions of bull transition, closing lower in the midst of a positive market breadth and selloffs in telecoms giant- Airtel Africa which weighing down the benchmark Nigerian Exchange All-Share index on a low traded volume.

Just as mentioned in our earlier update, the candlestick formation as of midweek signaled a price correction, or pullback, which NGX index action caved in on Thursday as traders took profit of capital gain recorded recently.

Also, more companies continued to notify the exchange of their closed period and planned board meetings. Investors are also keeping an eye on macroeconomic reports expected this month, particularly the first meeting of the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) for the year, as well as unaudited Q4 financials. This is likely to drive the ongoing volatility in the face of the usual January effect that had been positive in the previous years and month.

The mixed market sentiment and strong momentum across the major sectors of the market continued to support the recovery as revealed in the short, medium and long term trend, despite the pullback witnessed on Thursday.  This volatility and recovery are likely to continue in this month of January due to the expected full-year earnings and corporate actions that would support price.

This is however, notwithstanding uncertainties associated with the coming 2023 general elections, and a possible post-election rally, all things being equal, just as the NGX’s historical peak of earnings reporting season draws closer,. This is expected to attract more liquidity and buying interest depending on earnings surprises and disappointments. Also, as the rates and yields in the fixed income market have been on the decline across all tenor as seen in the last TB primary market auction offer for 2022.

Technically, the NGX index action is on its distribution phase in the face of a topping chart and bullish V-shape pattern that supports reversal or continuation of trend on a daily and weekly time frame, as the convergence between the index action and MACD on a dally chart supports continuation of trend, in the midst of profit taking that hit some telecoms and insurance stocks.  let us keep our gaze on market forces and money flow.

Technical indicators at the end of Thursday trading  appear to remain stronger, as revealed by the ADX reading 63.41, just as, RSI and Money Flow Index are looking up to read 90.55 and 100 points against the previous session 90.39 and 100 points respectively. Volume trading pattern 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 and economic reset in 2023, that comes with huge opportunities to create wealth for smart investors and traders.

To navigate the rest of the week 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, as it tries to rebound, trading at $78.67 per barrel on increasing fear of demand, global economy concern in the midst of rising cases of Covid-19 in China and its reopening. Just as the 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 lingered so far. The up and down movement of oil price also continues to drive volatility.

Meanwhile, Thursday’s trading opened in the upside before pulling back on profit taking in some highly priced stocks, medium and low cap companies, pushing the NGX’s index to an intraday low of 50,868.52 basis points from its highs of 51,724.88bps before closing sharply below its opening level at 50,868.52bps.

Market technicals were positive and mixed, with lower volume of trade compared to the previous session in the midst of breadth favoring the bulls on mixed sentiment as revealed by Investdata’s Sentiments Report showing 75% buy position and 25% sell volume. The total transaction volume index stood at 0.78 points, just as momentum behind the day’s performance was strong as Money Flow Index looked up at 100pts, from the previous day’s 100pts, indicating that funds entered the market.

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Index and Market Caps

At the end of Thursday trading, the composite NGX All-Share index lost 885.13 basis points, closing at 50,868.52bps after opening at 51,657.56bps, representing a 1.53%, just as market capitalization shed N429.71bn closing at N27.71tr from the previous day’s N28.14tr, which also represented a 1.53% depreciation in value.

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The session’s downturn was driven by selloffs in the shares of Airtel Africa, University Press, NPF Microfinance, Nahco, NGX Group, Mansard and Mutual Benefits Assurance, among others, which impacted negatively on Year-To-Date loss of 0.75%. Market capitalization YTD loss stood at N208.37bn, representing 0.75% below its opening level for the year.

Mixed Sector Indices

Sectorial performance indexes for the session were mixed, as NGX Insurance that closed lower by 0.93% while NGX Consumer goods led the advancers after gaining 1.23%, followed by Banking and Energy with 0.88% and 0.09% respectively. Just as NGX Industrial goods closed flat.

Market breadth was positive as gainers outnumbered losers in the ratio of 20:16; whereas activities in volume and value were lower, after investors exchanged 138.72m shares worth N1.83bn. Volume was driven by trades in Sterling Bank, GTCO, Accesscorp, FBNH and Zenith Bank.

John Holt and Honeywell Flour were the best performing stocks, after gaining 10% and 9.95%, closing at N0.88 and N2.43 per share respectively on market forces and earnings expectation.  On the flip side, Prestige Assurance and Airtel Africa lost 8.70% and 8.26% respectively, closing at N0.42 and N1,500per share, purely on profit taking.

Market Outlook

We expect positive sentiment and mixed trend on profit taking as  bargain hunting  ahead of January effects and volatility in the face of  Q4 earnings reports and election uncertainty, as pullback at this point add more strength to upside potential. As such, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.

Crucial Announcement


As the new year begins, you need to get started with activities that will help you in achieving your goals for the year. To this end, I must tell you that events and activities that happened in 2022 will shape 2023.


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