Market Update for December 17
The positive momentum on the Nigerian Exchange continued in the face of mixed session on Tuesday, as the benchmark NGX All-Share index closed higher on a low traded volume and negative market intervals, due to profit taking in some sectors while buying interest across mid and high cap stocks supported the key performance index. This extended the bull rally for the six consecutive sessions on the back of funds entering the market to drive the ongoing Santa Claus rally that is associated with year-end seasonality and sentiment. The index action forming a top reversal chart pattern in the midst of buying sentiment, looks somewhat at this point. So, players needs confirm the next direction after breaking out the 100,000 psychological line.
The bullish outing and low traded transaction are reflections of wait and see, as sector rotation and portfolio rebalancing continued ahead of 2025. Despite the relative low volume of transactions, the smart money are already in the market and some stocks. This created buying opportunities for discerning players ahead of January effects that had turned a positive pattern and trends on the NGX in recent years to guide positioning in the right stocks at the right prices. The nation’s economic managers continue to trade the economy for foreign inflow with high interest rate that is driving low productivity and failed to checkmate inflation of today.
The NGX’s index revealed a top pattern and same time with a saucer chart pattern formation that supports bullish trend, as players are looking to positive trend, with increasing number of companies hitting a new 52-week high. Just as end of the year positioning continued on the back of cross deals and others in the market. During the session, the following companies Nemeth Pharm, Eterna, The Initiates Plc, Custodian Invest, Berger Paints, Airtel and Cutix notified the market of insiders dealings.
Money flow and other momentum tools were up, presenting buy opportunities for market players who understand the importance of buying low and selling high in any market condition in the midst ongoing volatility and buying sentiment. As index again tested 100,086.20bps level to sustain uptrend, thereby creating the perfect setup for high probability of continuation to catch end of year 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 strength in the midst of changing market fundamentals and technicals on the NGX and the economy.
Technically, the NGX is on a markup phase in the midst of recovery, as candlestick formation and momentum indicators reveal strength in the market. As ADX is looking up to read 24.43 points, while RSI and Money Flow Index were up at 73.95 and 88.49 points against the previous session’s 73.08 and 79.42 points respectively. Consequently, market players should watch this current trend and trade wisely in the face of funds entered the market on a buying sentiment in some sectors and position taking in others on a daily time frame. Also, trading volume pattern continued to oscillates, suggesting buying interest and selloffs in the market amid players revaluing the market and economic events in the face of policy direction of the government that look inconsistent.
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Oil prices on Tuesday inched up to continue its oscillation, trading at $73.34 per barrel in the midst of US draw in crude oil inventories and expected US rate cut. Even as OPEC delay production hike in the face of ongoing geopolitical tensions in the Middle East and Russia war with Ukraine. As US President-elect tariff threats its trade’s partners and global economy outlook. The rising geopolitical uncertainties across many economies remains a threat to the global economy and energy consumption. This trend may likely continue for the rest of 2024, 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 slightly in the red till midday before rebounding in the afternoon to oscillate on positioning and profit taking across the blue chip companies and others stocks. This situation pushed the NGX’s index to an intra-day high of 100,086.20bps from its lows of 99,791.29bps, before closing above its opening level at 100,050.90bps.
Market technicals were mixed and weak 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 88% buy position and 12% sell volume. The total transaction volume index stood at 0.94 points, just as mometum behind the day’s performance was strong as Money Flow Index inched up to read 88.49pts, from the previous day’s 79.42pts, indicating that funds entered the market.
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Index and Market Caps
At the end of Tuesday trading, the key performance index NGXASI gained 128.31 basis points, closing at 100,050.94bps from 99,922.63bps, representing a 0.13% up, while market capitalization rose by N76.69.bn, at N60.65tr from the previous day’s N60.57tr, representing a 0.13% value gain.
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The upturn was driven by buying interests in the shares of Aradel, Mrs Oil, GTCO, Stanbic IBTC, SterlinNG, Lasco and Wapic, among others. This impacted mildly on Year-To-Date gain as it inched up to 33.80%, while Market capitalization gain stood at N16.89tr, representing 48.72% growth over its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, as NGX Consumer and Industrial goods closed lower by 0.15% and 0.02% respectively, while NGX Insurance led advancers after losing 1.56% followed by Banking and Energy with 0.19% and 0.06% respectively.
Market breadth turned negative, as losers outnumbered gainers in the ratio of 26:23, while activities in volume and value were mixed after investors exchanged 478.08m shares worth N22.51bn. Volume was driven by trades in Etranzact, Transcohot, Oando, Veritas Kapital and SterlingNG.
MRS Oil and Wapic were the best performing stocks, gaining 10% each, closing at N145.20 and N1.54per share respectively on the back of sentiment and market forces respectively. On the flip side, Cutix and Tantalizer lost 10% and 9.73% respectively, closing at N2.25 and N1.67per share, purely on profit taking.
Market Outlook
We expect mixed sentiment to continue amid profit taking, as bargain hunters position, while rebalancing their portfolios midst high inflation, low valuation and position taking by smart money for year-end. Also, sector rotation and portfolio rebalancing continued in the market with investors taking advantage of pullbacks and 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
