Mixed Momentum On NGX As Investors Bet On Inflation, GDP Data, MPC Outcome

Market Update for November 14

Trading activities on the Nigerian Exchange on Tuesday rebounded, wiping away the previous session’s loss on increased buying sentiment and low traded volume as market players are holding their positions in expectation of macroeconomic data like October inflation report, and Q3 GDP. Investors continue to bet on the outcome of this month-end’s meeting of the Monetary Policy Committee which would give an insight into the flow of funds and market direction, in the face of year-end seasonality which kicked off with impressive quarterly earnings. There is equally the rising fixed income market yields that remains a mixed bag for the equity space.
The better-than-expected corporate earnings released on the exchange offer an insight into the high possibility of dividend growth at the end of this current financial year-end, especially among the service companies with earnings yield and earnings per share that support high payout ratios at the end of the day.
Also, the time frame for dividend payment and capital gain as hedge against the spiraling inflation is now shorter, hence the ongoing rebalancing by portfolio managers, looking at the different investment choices or windows to create value especially as real returns is still above inflation, thereby supporting investment objectives to create wealth.
The benchmark NGX All-Share index closed higher on a low traded volume and positive market breadth in the midst market players digesting the latest auctions yields rise. Other factors include the slow economic growth and rising rate of insecurity across the country, following which many countries have issued travel advisory to their citizens. This, we must note, and sadly too, is not good for the economy, because no foreign investor will come into an unsafe country, except for the high risk takers.
The candlestick formation at the end of Tuesday trading signaled reversal that needs to be confirm as NGX index still trades above the T line and heading again to 71,000 market after making higher highs to test a new all-time high of 71,136.14 points, in the previous sessions. Traders needs to watch out as the market consolidates at this level of accumulation to markup or decline phase in the face of a very high volatility.
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Oil price oscillation continued, as it trades flat at $82.73 per barrel in the midst of weak US inflation data and another build of oil inventories. As the ongoing Middle East conflict influencing demand and supply, despite the rate pause by central banks as inflation is cooling off in some nations. With geopolitical tensions rising across the globe at a time the Russia-Ukraine war gradually approaches its third year, and remains a major concern with much more at stake than previously thought. The supply tightening due to the Russia-Ukraine war will propel the up and down movement in oil price, which also drive market volatility across the globe.
Tuesday’s trading started slightly on the downside before rebounding and oscillated for the rest of the session on buying interest in highly priced and others stocks, a situation that pushed the Index to an intraday high of 70,876.35bps from its lows of 70,609.14ps, before closing above its opening figure at 70,876.35bps.
Market technicals were positive and mixed with a lower volume traded, when compared to the previous session, in the midst of breadth favoring the bulls on a buying pressure as revealed by Investdata’s Sentiments Report showing 100% buy position and 0% sell volume. The total transaction volume index stood at 0.85 points, just as the energy behind the day’s performance was strong, with Money Flow Index looking down to read 76.36pts, from the previous day’s 81.61pts, indicating that funds left the market, despite closing higher.
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Index and Market Caps
The NGX All-Share Index, at the end of Tuesday’s trading gained 263.54bps, closing at 70,876.35bps, from the 70,612.81bps opening level, representing a 0.37% growth. Market capitalization rose by N165.10bn, closing at N38.96tr, from the previous day’s N38.80tr, which also represented a 0.37% in value gain.
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Meanwhile, the upturn was driven by position taking in BUA Cement, Zenith Bank, GTCO, UBA, FBNH, Lafarge, NNFM, UACN, Mecure and Oando among others, impacting negatively on Year-To-Date gain which increased to 38.29%, while Market Capitalization YTD gain stood at N10.78tr, representing a 39.82% rise above its opening level for the year.

Bullish Sector Indices
Sectoral performance indexes were in green, save for the NGX Consumer Goods index that closed 0.11% lower, while NGX Industrial goods led the advancers after gaining 1.39%, followed by Banking and Insurance with 0.69% and 0.23% respectively. Just as NGX Energy finished flat.
Market breadth was positive as gainers outnumbered losers in the ratio of 33:16, while activities in volume and value terms were down, after investors exchanged 327.43m shares worth N3.37bn, driven by trades in Japaul Gold, Fidelity Bank, UBA, Oando and Jaiz Bank.
NNFM and C & I Leasing were the best performing stocks, gaining 10% and 9.97% respectively, closing at N19.80 and N3.75per share respectively, on market sentiment and forces. On the flip side, Redstar and FTN Cocoa lost 9.76% and 9.29%, closing at N2.96 and N1.66per share, purely on the back of profit taking.

Market Outlook
We expect mixed momentum on profit taking and portfolio rebalancing on the strength of the better-than-expected corporate numbers released and expected inflation reports in the face of high yields and sector rotation. As 2024 is setting up with dividend season ahead.
Meanwhile, all eyes are on the fiscal and monetary authorities to give direction of the government reforms and policies so far.

Take Action

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CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605