Market Update for November 8
The nation’s equity market, Monday, started the week on a very strong note with the benchmark index extending its positive outing for the second successive session as buying sentiments and increased as reflected in the very high traded volume unseen in the market had not seen in the previous week of profit-taking and selloffs.
The market is, seemingly, reacting to the news that the Central Bank of Nigeria (CBN) has granted Approval-in-Principle to the country’s two leading telecoms companies to operate Payment Service Banks. This discerning investors and traders have rightly interpreted to mean improved earnings, profit, and payout in the coming quarters and year, as they position in the shares of MTN Nigeria and Airtel Africa. They are aware that this service has impacted positively on the numbers of these and other telecoms companies in their operations outside of Nigeria.
Consequently, the NGX All-Share Index made a new 2021 high on a high volume due to the upward movement in the prices of MTNN from N175.60 to N192.50 per share and Airtel Africa from N780 to N858, sending the benchmark index up sharply by 1,232 basis points. This signals a markup phase or bullish sign to watch out for, with the market likely to repeat the last quarter 2020 pattern that was driven by Dangote Cement and others. This momentum is likely to influence the general market because the Q3 corporate earnings of many companies beat expectations which may support the possibility of dividend growth in the 2022 corporate actions.
Technically, the NGX index’s action has indicated a markup phase after breaking out a major strong resistance level of 42,472.56 and psychological line of 43,000 to touch 43,246.87 on a high volume and positive breadth. As momentum indicators confirm a new trend with the MACD positive divergence crossing over the bullish signal line, while the money flow index stood at 63.07points on a daily chart. The possibility of a bull spike into the New Year is high after market players finish digesting the recently released earnings, as the market is set to break out its 2018 resistance level of 43,921.17bps, if these positive vibes continue.
However, these strong earnings, interim corporate actions, and level of liquidity in the equity space will determine the extent of the market rally when it rebounds from this pullback. Already too, all eyes are on happenings as regard global inflation rates and oil prices at the international markets, which is currently oscillating around $84 per barrel; on the impact of the drop in oil consumption by China, as OPEC holds on to supply, just as direction of yields in the fixed income market remains unclear.
Meanwhile, Monday’s trading opened slightly on the downside and rebounded in the midmorning to midday before oscillating for the rest of the session on buying interests in the previously mentioned telecoms companies and other blue-chips that pushed the NGX index to an intraday high of 43,246.32 basis points where it closed significantly above its opening level, from its lows of 41,976.30bps.
Market technicals for the day were positive and strong with volume traded higher than the previous day’s in the midst of breadth favoring the bulls on a high buying pressure as revealed by Investdata’s Sentiment Report showing 100% bull volume. The total transaction volume index stood at 1.09 points, just as momentum behind the day’s performance remains relatively strong, Money Flow Index looking up at 63.07 points, from the previous day’s 55.78 points, indicating that funds entered the market.
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Index and Mkt Cap Movement
At the end of Monday trading, the key performance index NGXASI gained 1,232.37 basis points, closing at 43,246.87bps after opening at 42,014.43bps, representing a 2.93% growth, just as market capitalization rose by N643.14bn, closing at N22.57tr, from the opening value of N21.98tr, also representing 2.93% appreciation in value.
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Monday’s upturn was driven by buy interests in Airtel Africa, MTNN, Unilever, Guinness, FBNH, United Capital, Lafarge Africa, NGX Group, and Redstar, among others, which impacted positively on Year-To-Date gain, which increased to 7.39%. Market capitalization stood at N1.5tr YTD, representing a 7.03% growth from the year’s opening value.
Mixed Sector Indices
Sectoral performance indexes were mixed, as NGX Consumer and Industrial Goods indexes closed higher by 0.25% and 0.13% respectively, while NGX Insurance index led the decliners after losing 1.43%, followed by Energy and Banking with 0.57%, and 0.09% respectively.
Market breadth was positive, as advancers outnumbered decliners in the ratio of 25:13, while transactions in volume and value terms were up, as investors exchanged 443.61m shares worth N5.05bn, compared to the previous day’s 277.04m units valued at N2.06bn. Volume was boosted by trades in Sterling Bank, UACN, FBNH, Zenith Bank and Transcorp.
Airtel Africa and RedstarExpress were the best-performing stocks after gaining 10% and 9.94% respectively, closing at N858 and N3.43per share respectively on market sentiments and forces. On the flip side, Conoli and CWG lost 9.8% and 9.73% respectively, closing at N23.00 and N1.02 per share purely on profit-taking and selloffs.
Market Outlook
We expect the trend to continue but on a reduced momentum as breakout traders jump into positions on the strength of Q3 numbers, just as candlestick formation and volume traded at the end of day trading revealed positive investors vibes as the index continues to trend up. Also, we note that institutional players are not selling but positioning in blue-chip companies, as they watch the pullback on a light volume. It is equally noteworthy that this pullback at this level is for the accumulation of more positions ahead of year-end seasonality. Also, many stocks are trading within their buy ranges, a situation expected to attract more funds into the equity space, given the Dividend Yield capable of serving as a hedge against inflation.
Invest 2022 Traders & Investors Summit
Theme: Master The Market, Get The Best Of Pre-Election Year 2022
Sub-Topics
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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Ambrose Omordion
CRO|Investdata Consulting Ltd
ambrose.o@investdataonline.com
Tel: 08028164085, 08179547605
