Market Update for January 16
Thursday’s was a mixed trading session on the Nigerian Exchange, with the composite NGX All-Share index rebounding marginally, halting the four-day bearish transition on a mixed sentiment of buying and selling across some major sectors of the market which weighed positively on the index.
Buying interest in the consumer goods sector and bargain hunting among stocks that recently suffered losses, especially the renewed interest in Dangote Cement and others helped despite the negative market breadth and improved traded volume.
The pullbacks due to profit taking and selloffs have created buying opportunities for discerning investors and smart traders ahead of January Q4 earnings season that will kick off any moment from next week. Volatility and low valuation are continuing in the face of mixed macroeconomic data and expected economic events.
In particular, the first Central Bank of Nigeria (CBN) policy meeting for year 2025 is expected to give direction based on the December inflation report, with all eyes on the Q4 and 12 months’ unaudited accounts of quoted companies, especially those with December year-end.
The recent waves on the NGX are just portfolio rebalancing-driven, as well as profit taking in preparation for corporate earnings and dividend expectation in Q1 which is the peak of the earnings reporting season which will kick-off any moment from next week. Also, dividend yield remains very important to players.
The NGX’s index revealed a bullish hammer candlestick pattern that supports uptrend, as market players position in high yield dividend paying companies and growth stocks with higher upside potentials as a number of companies are hitting new 52-week highs, due to positive sentiment for some sectors, consolidation moves in some industries and expectations of positive corporate numbers from some others, based on their quarterly performance and history of dividend payouts.
Also, new year positioning continued on the back of cross deals and others in the market. During the session, for example, more companies notified the exchange of their closed period and board meetings. They include Prestige Assurance, Lasaco, Japaul Gold and May&Baker, while Universal Insurance and Eterna announced the appointment of a new Managing Director/CEO. Airtel Africa also continued to update the market of its share buyback and notice of board meetings to approve its nine-month financials.
Technically, money flow and other momentum tools were somewhat mixed, 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 selling sentiment. As the index is set to reverse after testing 100,860.10bps level to signal uptrend, thereby creating the perfect setup for high probability of continuation to catch new year repositioning at the right price. Also, as the index still trades below the T-line, after testing one of the two moving averages of 50-EMA and 50-SMA, this indicates somehow return of strength in the midst of changing market fundamentals and technicals on the NGX and the economy.
Technically also, the NGX is on a decline phase in the midst of reversal, as candlestick formation and momentum indicators reveal somewhat strength in the market. As ADX is looking down to read 48 points, while RSI and Money Flow Index were mixed at 51.69 and 64.79 points against the previous session’s 51.13 and 69.90 points respectively. Consequently, market players should watch this current trend and trade with caution in the face of funds leaving the market on a buying sentiment in some sectors and profit taking in others on a daily time frame. Also, trading volume pattern continued to oscillates, suggesting wait and see 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 Thursday were up to continue its oscillation, trading at $81.60 per barrel in the midst of sanction on Russia and US draw in crude oil inventories ahead US inflation data. Even as OPEC project robust demand for oil in 2025 and 2026 in the face of ongoing geopolitical tensions in the Middle East and Russia war with Ukraine. As Trump presidency policy uncertainty 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 in 2025. This trend may likely continue, 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.
Thursday’s trading started in the red before rebounding at midday and was sustained for the rest of the session on buying interest in high cap stocks and others, despite profit taking. This situation pushed the NGX’s index to an intra-day high of 102,311.50bps from its lows of 100,860.50bps, before closing slightly above its opening level at 102,183.10bps.
Market technicals were negative and mixed with higher 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 91% buy position and 9% sell volume. The total transaction volume index stood at 0.81 points, just as energy behind the day’s performance was strong as Money Flow Index looks down to read 64.79pts, from the previous day’s 69.90pts, indicating that funds left the market, despite closing in the green.
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Index and Market Caps
At the end of Thursday’s trading, the benchmark NGXASI inched up 87.11 basis points, closing at 102,183.06bps from 102.095.95bps, representing a 0.09% up, while market capitalization rose by N53.11bn, at N62.31tr from the previous day’s N62.26tr, representing a 0.09% value gain.
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Meanwhile, the upturn was driven by position taking in the shares of Dangote Cement, Dangote Sugar, NNFM, GTCO, Africa Prudential and Custodian, among others. This impacted mildly Year-To-Date gain as it turned negative 0.71%, while Market capitalization lost stood at N1.50tr, representing 0.71% decline over its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, as NGX Energy and Insurance closed lower by 2.49% and 1.27% respectively, while NGX Industrial goods led the advancers after gaining 1.39% followed by Banking and Consumer goods with 0.22% and 0.20% respectively.
Market breadth was negative, as losers outnumbered gainers in the ratio of 35:25, while activities in volume and value were UP after investors exchanged 472.16m shares worth N16.70bn. Volume was driven by trades in GTCO, Universal Insurance, Fidelity Bank, Accesscorp and Nascon.
NNFM and Dangote Sugar were the best performing stocks, gaining 10% and 9.91% respectively, closing at N54.45 and N40.50 per share respectively on the back of sentiment and market forces respectively. On the flip side, Livestock Feeds and Enusell lost 10% and 9.91% respectively, closing at N5.40 and N15.62per share, purely on selloffs and profit taking.
Market Outlook
We expect mixed sentiments to continue amid profit taking, as bargain hunters take advantage of pullbacks to position, while rebalancing their portfolios midst high inflation and low valuation ahead of Q4 earnings reports. Also, sector rotation and portfolio rebalancing continued in the market with investors taking advantage of price 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
