Market Update for January 21
It was a bullish session on the Nigerian Exchange on Tuesday, as market players took advantage of recent pullbacks and correction to buy in value in the midst of policy changes and consolidation in some sectors and industries ahead of corporate earnings that are expected to start hitting the any moment from now.
Consequently, the composite NGX All-Share index closed higher on improved volume traded and positive market breadth, thereby extending the bull transition for four consecutive sessions which created N1.08tr wealth for investors in this recent recovery and markup. Bargain hunters positioned in medium and large cap stocks that weighed on the index, as the market awaits unaudited Q4 and full year accounts of companies with December year-end on the NGX.
The uptrend and accumulation in market continued as players repositioned their portfolios in the midst of prevailing low valuation and January trading patterns, just as volatility continued in the face of mixed macroeconomic data and expected economic events. The Central Bank of Nigeria (CBN) has shifted its first policy meeting for year 2025 to February 17 and 18. Following the delayed meeting and announcement therefrom, the state of expected corporate earnings should give direction for dividend investors and other players, especially for companies with December year-end.
The recent waves on the NGX are just portfolio rebalancing-driven, as well as profit taking in preparation for corporate earnings inflow and dividend expectation in Q1 which is the peak of the earnings reporting season due to kick-off any moment from now, as mentioned earlier. Also, dividend yield remains very important to players. The NGX All-Share index has so far revealed a bullish pattern that supports uptrend, as market players position in 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.
Also, new-year positioning is ongoing on the back of cross deals and others in the market. During the session, for example, more companies notified the exchange of their closed period and board meetings. They include VFD Group and Honeywell, while Airtel Africa also continued to update the market of its share buyback. Just as Ellah Lakes informed the exchange of its insider dealings.
Technically, money flow and other momentum tools were somewhat 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 buying sentiment. As the index is trending up to signal buy opportunities, thereby creating the perfect setup for high probability of continuation to catch new year repositioning at the right price. Also, as the index l trades above the T-line and the two moving averages of 50-EMA and 50-SMA, this indicates somehow return of strength in the midst of changing market fundamentals and technicals on the NGX and the economy.
Also the NGX is currently in its accumulation phase in the midst of increasing traded volume, as candlestick formation and momentum indicators reveal somewhat return of strength in the market. ADX is looking down to read 41.00 points, while RSI and Money Flow Index were mixed at 58.03 and 63.06 points against the previous session’s 52.94 and 63.06 points respectively. Consequently, market players should watch this current trend and trade wisely in the face of funds leaving the market on a buying sentiment in some sectors and profit 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 on Tuesday inched down to continue its oscillation, trading at $79.17 per barrel in the midst of Trump first day resumption in office and stronger dollar. Even as a delay to his tariff threats boosted bearish sentiment in the face drop in US crude inventories. 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 rising geopolitical uncertainties across many economies remains a threat 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.
Tuesday’s trading started on the upside and was sustained throughout the session on buying interest in high cap stocks and others, despite profit taking. This situation pushed the NGX’s index to an intra-day high of 103,210.39bps from its lows of 102,370.4bps, before closing above its opening level at 103,138.02bps.
Market technicals were positive and strong with higher volume when compared to the previous session in the midst of breadth favoring the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 91% buy position and 9% sell volume. The total transaction volume index stood at 0.62 points, just as energy behind the day’s performance was relatively strong as Money Flow Index looks flat to read 63.06pts, from the previous day’s 63.06pts, indicating that funds entered the market.
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Index and Market Caps
At the end of trading on Tuesday, the benchmark NGXASI gained 786.56 basis points, closing at 103,157.20bps from 102,370.62bps, representing a 0.77% up, while market capitalization rose by N483bn, at N63.34r from the previous day’s N62.86tr, representing a 0.77% appreciation in value.
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The upturn was driven by position taking in the shares of Oando, Transcorp, Nascon, Wapco, Livestock and SOCA, among others. This impacted mildly Year-To-Date gain as it turned negative 0.54%, while Market capitalization lost stood at N1.41tr, representing 0.54% decline over its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed as the NGX Consumer Good and Energy indexes closed 0.38% and 0.36% lower respectively, while the NGX Insurance led the advancers after gaining 1.03% followed by Banking and Industrial goods with 0.30% and 0.03% respectively.
Market breadth was positive, as gainer outnumbered losers in the ratio of 26:24, while activities in volume and value were down after investors exchanged 421.43 million shares worth N11.68bn. Volume was driven by trades in Lasaco, Universal Insurance, Aiico, Prestige Assurance and Wema Bank.
SCOA and Omatek were the best performing stocks, gaining 9.93% and 9.88% respectively, closing at N2.99 and N0.89 per share respectively on the back of sentiment and market forces respectively. On the flip side, NSLTech and Abbey Building lost 9.88% and 9.09% respectively, closing at N0.73 and N3.30per share, purely on selloffs and profit taking.
Market Outlook
We expect mixed sentiments to continue amid profit taking, as bargain hunters take advantage of low valuation, while rebalancing their portfolios midst high inflation and Q4 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