Low Transaction Volume, Pullbacks On NGX Creating New Buy Prospects Ahead Year-End

Market Update for November 24

Nigeria’s equity market had a mixed session at the midweek when the composite NGX index suffered a marginal decline, thereby extending its negative outing and sideways trending on less than average traded volume. Market breadth was, however, positive amid buying interests across sectors, except for the Oil/Gas that witnessed selloffs and profit-taking, dragging the market down with it.

The continued mixed sentiments and signals at the end of midweek’s trading indicate selling positions and buying interests among players, considering the ongoing portfolio rebalancing on the strength of what is happening in the fixed income environment. Corporate earnings position as of 2021Q3 revealed the undervalued state of the market, looking at price to earnings ratios of many stocks, besides the positive economic data.

Like we have reiterated, the market is still good technically, with the NGX index action staying strong in the face of profit-taking and portfolio repositioning, as the NGX All-Share index slipped to continue its sideways trending within the rectangular channel. Momentum indicators for the day were mixed nonetheless, as the ADX dropped to 58.76, while Money Flow Index rose to 70.71 points on the daily chart. The continuation of this trend depends largely on the interplay of market forces and inflow of funds into equity assets.

Meanwhile, Wednesday’s trading opened slightly on the upside, before pulling back to oscillate throughout the session on selloffs and position taking in the blue chips, a situation that pushed the NGX index to an intraday low of 43,233.98 basis points from its highs of 43,302.59bps before closing slightly below the opening points at 43,245.02bps.

Market technicals were weak and mixed, given the lower volume traded than the previous day’s in the midst of breadth that favoured the bulls on ‘sell’ sentiments as revealed by Investdata’s Sentiment Report showing 16% ‘buy’ volume and 84% sell position. The total transaction volume index stood at 0.56 points, just as the energy behind the day’s performance remained strong; with the Money Flow Index reading 70.71 points, from the previous day’s 66.11 points, indicating that there was funds inflow, despite the down market.

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Index and Mkt Cap Movement

The benchmark NGXASI, at the end of Wednesday’s trading slipped 10.09 basis points, at 43,245.02.14bps after opening at 43,255.14bps, representing a 0.02% drop, just as market capitalization fell by N5.28bn, closing at N22.57tr, from the opening value of N22.58tr, also representing 0.02% value loss.

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Midweek’s downturn was propelled by selloffs in Stanbic IBTC, FBNH, Access Bank, GSK, International Breweries, Eterna, Honeywell, and Wema Bank among others, which impacted mildly on Year-To-Date gain, reducing it to 7.39%. Market capitalization stood at N1.55tr YTD, representing a 7.20% growth from the year’s opening value.

Bullish Sector Indices

Sectoral performance indexes were up, except for NGX Oil/Gas that closed 0.24% lower, while the NGX Insurance index led the advancers, gaining 2.05%, followed by the Banking, Industrial, and Consumer Goods with 0.25%, 0.13%, and 0.09% respectively.

Market breadth was positive as gainers outnumbered losers in the ratio of 22:18, while transactions in volume and value terms were down after players exchanged 243.19m shares worth N3.75bn, compared to the previous day’s 271.97m units valued at N2.9bn. Volume was boosted by trades in Zenith Bank, FCMB, Honeywell, Sterling Bank, and Access Bank.

Living trust and Chams were the best-performing stocks, gaining 9.79% and 9.52% respectively, closing at N0.88 and N0.23 per share respectively on market forces. On the flip side, Honeywell Flour and Eterna lost 9.78% and 9.02% respectively, closing at N3.69 and N6.05 per share, purely on profit-taking, amidst a statement by Ecobank Nigeria warning that the planned acquisition of Honeywell Group’s majority stake in Honeywell Flour Mills by Flour Mills of Nigeria breaches a subsisting court order. But both Flour Mills and Honeywell Flour, late on Wednesday night, in two different statements, debunked any such order (READ MORE).

Market Outlook

We expect a mixed trend to continue, as players digest the outcome of the latest Monetary Policy Committee meeting, ahead of Treasury Bills primary market auctions, with seasonality and cycles likely to influence equity prices ahead of year-end window dressing. The low volume traded in the midst of pullbacks is creating new buy opportunities on the strength of the Q3 numbers. Also, candlestick formation and volume traded during the session revealed that institutional players are not selling but positioning in blue-chip companies, as the index slide on a light volume. It is equally noteworthy that during a ranging market many players seat on the fence waiting for a breakout or down before jumping into any position.  Even as many stocks are trading within their buy ranges, a situation expected to attract more funds into the stock market, 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


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, Mr. Akinyinka Akintunde, Business Development Manager, AFEX Commodities Exchange Ltd.
3. Technical Outlook & Indicators For Profitable Market Timing, Mr. Abdul-Rasheed Oshoma Momoh, Head Capital Market at, TRW Stockbrokers Ltd 
4. Benefits & Dangers Of Fixed Income Instruments In An Inflationary Environment, Mr. Teriba Adeboye, MD/CEO, Qualinvest Capital ltd
5. Economic Outlook and implications of the N16.45 Trillion 2022 Budget On Sectors/Stock Market, Mr. OluwasegunAkinwale, 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

Investdata Consulting Limited holds the 10th edition of its annual Investment conference tagged Invest 2022 Traders & Investment Summit, which has over the years remained a game changer for market players. This edition is aimed at helping stakeholders identify opportunities and bringing ideas for profitable trading as we enter a pre-election year.

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Ambrose Omordion

CRO|Investdata Consulting Ltd




Tel: 08028164085, 08179547605