Market Update for November 16

It was a mixed trading on the Nigerian Exchange on Thursday, as the benchmark NGX All-Share index gained marginally, sustaining three consecutive sessions of bull transition in the face of profit taking. Also, market players continued to digest the latest 27.33% inflation data for October, up from the previous month’s 26.72%, even as all attention shifts to expected Q3 GDP and outcome of next week’s meeting of the Monetary Policy Committee which would give an insight into the flow of funds and market direction. These are coming in the face of year-end seasonality which kicked off with impressive quarter-3 earnings and rising fixed income market yields that remain a mixed bag for the equity space.
With the gradual approach of 2024 ahead of full-year earnings and dividend season in the first quarter, judging by the impressive corporate earnings released on the exchange that now offer an insight into the high possibility of dividend growth at the end of this current financial year-end. This is 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, especially wealth creation.
The key performance index closed slightly higher on an above average traded volume and negative market breadth in the midst selling sentiment. The slow economic growth and rising rate of insecurity across the country, following which many countries have issued travel advisory to their citizens remain worrisome. 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 divergence between the index action and momentum indicators signaled reversal is underway that needs to be confirm, even as NGX index still trades above the T
-Line and 71,000 market to make 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 distribution phase in the face of a very high volatility.
To navigate the rest of the quarter and year profitably using fundamental and technical analysis, join investdata’s live sessions at noon every trading day “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 mixed trend and volume pattern, it is time to shop for undervalued stocks, sector rotation, go for defensive stocks at the next insider playing opportunity.
Oil price oscillation continued, as it pulled back to four weeks’ loss at $77.52 per barrel in the midst of positive economic data and another build of oil inventories. Even as Nigeria lays corruption case to rest in win for Eni. 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.
Meanwhile, Thursday’s trading opened slightly in the green and oscillated throughout the session on buying interest in highly priced and others stocks, while profit taking hit many stocks a situation that pushed the Index to an intraday high of 71,080.30bps from its lows of 71,011.23ps, before closing marginally above its opening figure at 71,025.16bps.
Market technicals were positive and mixed with a higher volume traded, when compared to the previous session, in the midst of breadth favoring the bears on a selling sentiment as revealed by Investdata’s Sentiments Report showing 20% buy position and 80% sell volume. The total transaction volume index stood at 1.28 points, just as the momentum behind the day’s performance was strong, with Money Flow Index looking up to read 81.44pts, from the previous day’s 80.60pts, indicating that funds entered the market.
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Index and Market Caps
At the end of Thursday trading, the NGX All-Share Index, inched marginal up 10.82bps, closing at 71,025.16bps, from the 71,014.34bps opening level, representing a 0.02% up. Market capitalization rose by N6.00bn, closing at N39.06tr, from the previous day’s N39.05tr, which also represented a 0.02% in value gain.
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Thursday’s upturn was driven by position taking in MTNN, Flourmill, NB, NNFM, UACN, C & ILeasing and Oando among others, impacting mildly on Year-To-Date gain which increased to 38.58%, while Market Capitalization YTD gain stood at N10.78tr, representing a 39.84% rise above its opening level for the year.

Mixed Sector Indices
Sectoral performance indexes were mixed, as NGX Consumer Goods and Insurance index closed higher by 0.31% and 0.17% respectively, while NGX Banking led the decliners after losing 0.35%, followed by Energy with 0.18% . Just as NGX Industrial goods finished flat.
Market breadth turned negative as losers outnumbered gainers in the ratio of 32:22, while activities in volume and value terms were mixed, after investors exchanged 483.85m shares worth N4.38bn, driven by trades in Regency Insurance, Oando, Universal Insurance, Japaul Gold and UBA.
Deap Capital and NSL Tech were the best performing stocks, gaining 10% each, closing at N0.44 and N0.33per share respectively, on market sentiment and forces. On the flip side, ABC Transport and Etranzact lost 10% and 9.93%, closing at N0.90 and N6.80per share, purely on the back of profit taking.

Market Outlook
We expect mixed sentiment to continue as market players target dividend paying stocks and others, in the midst of profit taking and portfolio rebalancing on the strength of the better-than-expected corporate numbers released and high yields. 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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Ambrose Omordion
CRO|Investdata Consulting Ltd
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