Market Update for January 29
The seesaw movement on the Nigerian Exchange continued at the midweek. The session remained mixed as more corporate earnings reports hit the market with impressive numbers, spiking buying sentiments, even as some results were below expectation resulting in some profit taking as reflected in the negative market breadth. Investors reacted to positive unaudited fourth quarter scorecards from Aradel, University Press, Vitafoam, Stanbic IBTC, among others, pushing the benchmark NGX All-Share Index higher on a low traded volume in expectation of more earnings inflow. Also, more quarterly, full year unaudited and audited accounts were released from Lasaco Assurance, Royal Exchange, Neimeth Pharm, Caverton, Geregu Power, Total Energies, NNFM, NPF Microfinance, Etranzact, MRS Oil, FCMB and Vitafoam.
The above company performances were impressive and signaled a hold, offering an insight into what market players should expect at the end of their financial year end. However, it is noteworthy that Geregu, Total Energies, NNFM and others beat expectation.
However, the numbers from Royal Exchange, Caverton and Neimeth Pharm were below expectation, as some posted negative earnings for the period. Geregu Power announced a dividend of N8.50 for the financial year ended December 31, 2024.
The market rebound in the midst of buying interest and earnings reporting season signaled sector rotation and rebalancing of portfolios ahead of more corporate earnings. The bulk of numbers released so far look good and are capable of supporting prices and attracting inflow to the market. The persisting low valuation creates opportunities for market players to buy into value and reposition for dividend income.
Already, this season is giving insights into what a company’s dividend will look like on the strength of their numbers released so far. Volatility will continued as the earnings season progresses, just as the mixed macroeconomic data and expected economic events would shape market sentiments for companies with December year-end. The ongoing waves in the NGX are portfolio rebalancing-driven, just as profit taking in preparation for more scorecards inflow and dividend expectation in Q1 which is the peak of the earnings reporting season on the NGX. Also, dividend yield remains very important to players.
The NGX’s All-Share index retraced up to formed a top chart pattern that supports reversal or continuation of trend, because one day does not change a trend and it does not change outlook especially with reactions to earnings as market players digesting these numbers. Investors and traders should look the way of high yield dividend paying companies and growth stocks with higher upside potentials as a number of companies are hitting new 52-week highs.
This is due to positive sentiments for some sectors, consolidation moves in some industries and expectations of positive corporate numbers from some others, based on their quarterly performance and history of dividend payouts. During the session, International Breweries and Seplat informed the market of insider dealings while Airtel Africa updates the investing public of its share buyback. Zenith Bank announced the outcome of its primary activities.
Technically, money flow and other momentum tools were mixed, presenting buy opportunities for traders who understand the importance of buying low and selling high in any market condition in the midst ongoing volatility and selling sentiment. As the index pulled back to signal buy opportunities, thereby creating the perfect setup for high probability of continuation to catch dividend season repositioning at the right price. Also, as the index trades above the T-line and the two moving averages of 50-EMA and 50-SMA, this indicates some strength in the midst of changing market fundamentals and technicals on the NGX and the economy.
Also the NGX is currently in its wait and see phase in the midst of increasing traded volume, as candlestick formation and momentum indicators reveal something about the market. ADX is looking down to read 33.18 points, while RSI and Money Flow Index were mixed at 60.56 and 63.42 points against the previous session’s 64.50 and 58.48 points respectively. Consequently, market players should watch this current trend and trade wisely in the face of funds entered the market on a selling sentiment in some sectors and position taking in others on a daily time frame. Also, trading volume pattern continued to oscillates, suggesting wait and see in the market amid players revaluing the market and economic events in the face of policy direction of the government that look inconsistent.
To navigate the rest of Q1 and beyond profitably, it is important to run with economic events, fundamental and technical analysis, join investdata live sessions at noon every Monday, Wednesday and Friday’s trading session“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 pullbacks. Despite the oscillating volume of transaction witnessed in recent time, it is time to position in undervalued stocks, sectors and the next insider playing opportunity.
Oil prices at midweek inched down to continue its oscillation, trading at $76.56 per barrel in the midst of increased US crude production and easing geopolitical tensions. Even as tariff threats remained unsettled. OPEC project robust demand for oil in 2025 and 2026 in the face of ceasefire deal in the Middle East, while Russia and Ukraine war continue. As all eyes are on new tariff regime of Trump presidency. The geopolitical uncertainties across many economies remains a concern to the global economy and energy consumption in 2025. This trend may likely continue, while the up and down movement continues to drive volatility, even as the raging war between Ukraine and Russia continues to influence global oil supply and demand.
Midweek’s trading opened in the upside and it was sustained throughout the session on position taking in high cap stocks and others, despite profit booking in some stocks. This situation pushed the NGX’s index to an intra-day high of 104,615.09bps from its lows of 103,958.80bps, before closing above its opening level at 104,549.70bps.
Market technicals were weak and mixed with lower volume when compared to the previous session in the midst of breadth favoring the bears on a buying sentiment as revealed by Investdata’s Sentiments Report showing 90% buy position and 10% sell volume. The total transaction volume index stood at 0.78 points, just as momentum behind the day’s performance was relatively strong as Money Flow Index slide down to read 62.18pts, from the previous day’s 63.42pts, indicating that funds left the market, despite closing higher.
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Index and Market Caps
At the end of the trading, the composite NGX All-Share Index gained 590.99 basis points, closing at 104,549.74bps from 103,958.75bps, representing a 0.57% growth, while market capitalization rose by N364.72bn, at N64.52r from the previous day’s N64.16tr, representing a 0.57% appreciation in value.
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Meanwhile, the upturn was driven by position taking in the shares of Aradel, Stanbic IBTC, Vitafoam Uniiversity Press, Okomu Oil and Sunu Assurance, among others. This impacted positively on Year-To-Date gain that inched up to 1.57%, while Market capitalization gain stood at N2.12tr, representing 2.82% increase over its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes were in green, save for NGX Insurance index that closed 1.65% lower, while the NGX Energy led the advancers after gaining 3.34% followed by Consumer goods, Banking and Industrial goods with 0.81%, 0.75% and 0.01% respectively.
Market breadth was negative, as losers outnumbered gainers in the ratio of 36:25, while activities in volume and value were mixed after investors exchanged 410.63 million shares worth N14.79bn. Volume was driven by trades in Universal Insurance, Fidelity Bank, FCMB, Japaul Gold and Verita Kapital.
Aradel Holdings and Stanbic IBTC were the best performing stocks, gaining 10% each, closing at N594 and N71.45 per share respectively on the back of sentiment and impressive earnings reports respectively. On the flip side, Caverton and Thomaswy lost 10% and 9.80% respectively, closing at N2.07 and N1.84per share, purely on profit taking.
Market Outlook
We expect mixed sentiments to continue as players digest corporate numbers and more earnings reports hits the market to reveal value and give insight of dividend expectation, while rebalancing their portfolios midst high inflation and earnings expectations. Also, sector rotation and portfolio rebalancing continued in the market with investors taking advantage of price correction to buy into value.
This is amid the volatility and pullbacks that add more strength to upside potential. Consequently, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.
Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
08028164085