Market Update for December 18
The bullish outing on the Nigerian Exchange persisted at the midweek’s trading, amid buying interest by market players in some mid to high capitalized stocks, a situation that weighed positively on the benchmark NGX All-Share index which closed higher on a low traded volume and positive market breadth. This extended the bull transition back to back for the seventh successive session on oscillating traded volume and money flow to sustain the ongoing Santa Claus rally that is associated with year-end seasonality and sentiment. The index action formed a top reversal chart pattern in the midst of buying pressure, looks somewhat at this point.
This uptrend and low traded volume are reflections of the wait and see attitude among investors, as sector rotation and portfolio rebalancing continued ahead of 2025. Despite the relative low volume of transactions, smart money is 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 Aradel Holdings, 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 traders who understand the importance of buying low and selling high in any market condition in the midst ongoing volatility and buying sentiment. As index is set to breakout 100,586.40bps 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 25.90 points, while RSI and Money Flow Index were mixed at 76.67 and 88.16 points against the previous session’s 73.95 and 88.49 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 at the midweek stayed steady, continuing its oscillation, trading at $73.08 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.
Meanwhile, midweek trading opened on the upside and it was sustained throughout the session on position taking across the major sectors of the market. This situation pushed the NGX’s index to an intra-day high of 100,477.49bps from its lows of 100,050.90bps, before closing above its opening level at 100,477.50bps.
Market technicals were positive and mixed with lower volume 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 0.77 points, just as momentum behind the day’s performance was strong as Money Flow Index inched up to read 88.16pts, from the previous day’s 88.49pts, indicating that funds entering the market slowdown slightly.
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Index and Market Caps
The composite NGX All-Share index at the end of the session trading gained 426.52 basis points, closing at 100,477.46bps from 100,050.94bps, representing a 0.43% growth, while market capitalization rose by N258.bn, at N60.91tr from the previous day’s N60.65tr, representing a 0.43% appreciation in value.
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The upturn was driven by buying interests in the shares of Aradel, Mrs Oil, GTCO, Zenith Bank, SterlinNG, FCMB, Oando, Ucap and Wapic, among others. This impacted positively on Year-To-Date gain as it inched up to 34.38%, while Market capitalization gain stood at N17.65tr, representing 48.66% growth over its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes closed green, led by NGX Insurance after gaining 3.16% followed by Banking, Energy and Consumer goods with 0.68%, 0.33 and 0.08% respectively. Just as NGX Industrial goods finished flat.
Market breadth turned positive, as gainers outnumbered losers in the ratio of 42:18, while activities in volume and value were down after investors exchanged 389.70m shares worth N9.20bn. Volume was driven by trades in SterlingNG, UBA, Fidelity Bank, Universal Insurance and Aiico.
MRS Oil and Learn Africa were the best performing stocks, gaining 10% each, closing at N159.70 and N3.53per share respectively on the back of sentiment and market forces respectively. On the flip side, Africa Prudential and JohnHolt lost 10% and 9.96% respectively, closing at N14.40 and N6.51per 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
