Market Update for December 5

The Nigerian Exchange (NGX) turned positive on the second trading day of the week, after the previous day’s loss on increased position taking in low, medium and high cap companies, especially banking, ahead of midweek’s Treasury Bills primary market auction, release of the Consumer Price Index for the month of November and the ongoing seasonality. The rebound of the composite NGX All-Share index on improved volume and positive market breadth pushed the index above the T-line and 71,000 psychological line on a buying sentiment and positive momentum.
The ongoing mixed performance and trend in the face of index consolidation and side-trending for a long time, amid the bullish and positive momentum on the NGX reflects its disconnection from the gloomy economic situation of the country as headwinds continue to increase. This calls for cautious trading among the market players, amid the mixed outlook for the last month of the year 2023, and Q1 2024, due to the current policy direction of the Central Bank of Nigeria (CBN). Also, how the government hopes to implement the 2024 national budget and grow the country into a US$1tr economy over the next seven years remains unclear to the investing public and would require a road map.
However, we hope that managers of the Nigerian economy will formulate the right policies to achieve the expectation, among others while ensuring fiscal responsibility and maintaining a frugal disposition- a wide departure from the current norm. Already, we note that there is a divergence in economic policies and expectations, and hope to see how the government and its economic managers will achieve the target under the current policy direction.
Also, we warn that the policy tightening disposition of the CBN at this time could result in an unintended economic contraction in an environment where growth is already weak and fragile, with high cost of funds further pushing cost of production and services higher, driving prices northward. This is made worse by imported inflation due to the lingering foreign exchange challenges, among others.
The two consecutive quarters of rate hikes, as well as the proposed fresh round of bank recapitalization are expected to drive the much desired economic development in the face of a significant devaluation of the Naira, just as the surging inflation is bound to drive mixed outlook in the market and economy in the first half of 2024.
The buying sentiment in the midst of positive trade metrics supported the market on Tuesday, despite the ongoing divergent between MACD and index action which had continued on a mixed traded volume pattern ahead of dividend season in Q1 2024, while all eyes are fixed on the Santa Claus rally, year-end window dressing and 2023 audited full-year earnings reporting season which kicks off in January. A glimpse into what we should expect at year end has been provided by the unaudited Q3 corporate earnings reports released by listed companies.
Tuesday’s rebound in the NGXASI in the face of the ongoing volatility requires traders to be careful as the market enters another accumulation and distribution phase, amid portfolio rebalancing to hedge against inflation and market downturn. At this point, any correction or pullbacks will create another entry opportunity for discerning players as the market looks forward to the January earnings season.
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Oil price oscillation continued, as it pulled back to trade below $80 at $77.21 per barrel in the midst of US crude inventory build sending oil price lower to hit OPEC output cuts. Even as middle east conflict is taking another dimension. As rate hike pause by some of the central banks due to cooling inflation continue ahead of December policy meeting. The influence of demand and supply oil are worsened by the geopolitical tensions rising across the globe at a time the Russia-Ukraine war gradually approaches its third year. The war remains a major cause for 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.
Meanwhile, Tuesday’s trading opened in the upside and was sustained for the rest of the session despite oscillating on positioning in blue chip companies and profit taking in some stocks. This pushed the Index to an intraday high of 71,313.85bps from its lows of 70,945.55bps, before closing above its opening level at 71,250.17bps.
Market technicals were positive and strong with a higher volume traded, when compared to the previous session, in the midst of breadth that favoured the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 83% buy position and 17% sell volume. The total transaction volume index stood at 0.83 points, just as the energy behind the day’s performance was strong, with Money Flow Index looking down to read 74.89pts, from the previous day’s 74.36pts, indicating that funds entered the market.
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Index and Market Caps
At the close of Tuesday’s session, the NGXASI gained 303.34bps, closing at 71,250.17bps, from the 70,946.83bps opening level, representing a 0.43% growth. Market capitalization rose by N165.99bn, closing at N38.99tr, from the previous day’s N38.82tr, which also represented a 0.43% value gain.
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The upturn was driven by position taking in the shares of BUA Cement, FBNH, Unilever, GTCO, ETI, Zenith Bank, Wapco, UBA and NNFM, among others. This impacted positively on Year-To-Date gain, as it inched up to 39.02%, while Market Capitalization YTD gain stood at N10.78tr, representing a 39.56% rise above its opening level for the year.

Bullish Sector Indices
Sectoral performance indexes closed green, save for NGX Insurance index that closed lower by 0.17%, while the NGX Industrial goods led the advancers after gaining 1.94%, followed by Banking and Consumer goods with 1.45% and 0.08% respectively. As NGX Energy finished flat.
Market breadth was positive as gainers outnumbered losers in the ratio of 39:16, while activities in volume and value terms were up, after players exchanged 428.12m shares worth N11.01bn, driven by trades in UACN, UBA, GTCO, NIDF and Accesscorp .
NSL Tech and Multiverse were the best performing stocks, gaining 10% and 9.95%, closing at N0.77per and N7.07 share respectively, on market sentiment and forces. On the flip side, Abbey Building t and FTN Cocoa lost 9.88% and 9.09%, closing at N1.55 and N1.50 per share, purely on the back of selloffs.

Market Outlook
We expect the mixed performance to continue on bargain hunting for dividend paying stocks ahead of year end in the midst of sector rotation and portfolio rebalancing on the strength of the better-than-expected corporate numbers released and high yields. However, we note that 2024 is beginning dividend season ahead.
Meanwhile, all eyes are on the fiscal and monetary authorities to give direction of the government reforms and policies so far.

APPRECIATION
The management of Investdata Consulting uses this medium to appreciate all who participated in the Invest 2024 Summit, including our esteemed facilitators who were on hand to share their valued experiences garnered over the years.
While we appreciate those who joined us for the first time as we seek to create and grow wealth for discerning investors, we are grateful to all who have stood by us over the years and keep returning. May God bless you all, even as we pray that you continue to find value in this relationship that we cannot take for granted

Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
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