Market Update for November 25
The bearish sentiment and momentum on the Nigerian Exchange continued on the first trading session in the last week of November, as small, mid and high cap stocks suffered losses, weighing down the benchmark NGX All-Share index which closed lower. Transaction volume was very high, just as market breadth stayed negative, thereby extending the three consecutive sessions of bear transition. Market players continued to strategically take advantage of the pullbacks for positioning as all eyes are on the expected outcome of the ongoing policy meeting of the Central Bank of Nigeria in the midst of gloomy economic situation, which is expected to take into account the Q3 GDP numbers released on Monday. The data by the National Bureau of Statistics showed that GDP expanded by 3.5%, driven by the services sector.
Also, the month of November is gradually winding down to usher in the last month of the year 2024 that comes with Santa Claus rally.
The pullbacks in the face of oscillating volume pattern and funds leaving the market and some individual stocks, signaled portfolio rebalancing ahead of MPC meeting outcome of expected rate hike due to the runaway inflation that continued to move northward as the latest figure stood at 34% and PMI at 49.6 points according NBS and CBN reports. These should guide investors and traders as per where to buy into with the ongoing developments in the economy and the direction of exchange rate that have so far impacted some sectors and stocks negatively. Managers of the economy at this point may need to rethink their strategies, or continue to trade the economy of the nation for foreign inflow with high interest rate that is driving low productivity and failed to checkmate inflation of today.
Meanwhile, the decline phase in a recovery market creates opportunity to buy low, as the index went on a downtrend at the end of trading on Monday, just as Japaul Gold announced the signing of N26bn sand mining and land reclamation project, while Fidelity Bank, Airtel and Neimeth Pharm informed the investing public of their insiders dealing during the session. Money flow and other momentum tools continued to look down to present buy opportunities for bargain hunters who understand the importance of buying low and selling high in any market condition in the midst ongoing volatility. This is particularly true now that many stocks on the NGX are undervalued with high upside potentials, while investors carryout sector rotation on the strength of economic events and quarterly earnings reports that reveal the states of various companies on the NGX.
The selling sentiment in the midst of expected retracement from support level of 97,477.80 basis points and 97,502.67ps, after forming 3 Red Crows reversal pattern candlestick in a downtrend. This created the perfect setup for high probability of reversal or continuation to catch end of year repositioning at the right price. Also, as the index is trading below the T-line and the two moving averages of 50-EMA and 50-SMA, this indicate weakness in the midst of changing market fundamentals and technicals on the NGX and the economy.
Technically, the NGX is on a correction phase as sellers dominated in the face of recovery and selling sentiment, as candlestick formation and momentum indicators reveal a somewhat weakness in the market. ADX looking up to read 26.99 points, while RSI and Money Flow Index were down at 48.15 and 37.37 points against the previous session’s 50.86 and 38.29 points respectively. Consequently, market players should watch this current trend and trade wisely in the face of funds leaving the market on a selling sentiment in some sectors and position taking in others. Also, trading volume pattern continued to oscillates, suggesting buying interest and selloffs in the market amid players revaluing the market and policy direction of the government that look confused.
To navigate the rest of this quarter and beyond profitably, running with fundamental and technical analysis, join investdata live sessions at noon every Monday, Wednesday and Friday 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 range market. Despite the oscillating volume of transaction witnessed in recent time, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.
Oil prices on Monday inched up to continued its oscillation, trading at $73.17 per barrel in the midst of escalating Russia and Ukraine war. As OPEC likely to stick to production cut in the face of ongoing geopolitical tensions in the Middle East and global demand exceeding expectation. As world remain unclear with policies of Trump as he appoints cabinets. 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.
Monday’s trading opened in the red and it was sustained throughout the session on profit taking and selloffs that hits blue chip companies and other stocks. Despite the buying interest in some stocks, a situation pushed the NGX’s index to an intra-day low of 97,596.07bps from its highs of 97,850.73bps, before closing below its opening level at 97,626.27bps.
Market technicals were weak and mixed with higher volume 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 12% buy position and 88% sell volume. The total transaction volume index stood at 1.50 points, just as energy behind the day’s performance was weak as Money Flow Index inched down to read 37.37pts, from the previous day’s 38.29pts, indicating that funds left the market.
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Index and Market Caps
At the end of trading the composite NGX All-Share Index shed 202.75 basis points, closing at 97,626.27bps from 97,829.02bps, representing a 0.21% drop, while market capitalization fell by N123bn, at N59.17tr from the previous day’s N59.29tr, representing a 0.21% depreciation in value.
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The session downturn was driven by profit taking and selloffs in the shares of GTCO, Stanbic IBTC, Dangote Sugar, FBNH, UBA, Zenith Bank, FCMB, Wpaco and Vertias Kapital, among others. This impacted negatively on Year-To-Date gain as it inched down to 30.56%, while Market capitalization gain stood at N15.02tr, representing 44.61% growth over its opening level for the year.
Bearish Sector Indices
Sectoral performance indexes were down, save for the NGX Insurance index that closed higher by 0.69%, while NGX Banking index led the declincers after losing 1.60% followed by Energy, Industrial and Consumer goods with 0.24%, 0.16% and 0.03% respectively.
Market breadth was negative, as losers outnumbered gainers in the ratio of 27:29, while transactions in volume and value were up after investors exchanged 671.26m shares worth N10.64bn. Volume was driven by trades in FBNH, HMCALL,Tantalizer, Guinea Insurance and Prestige Assurance.
HMCALL and Sunu Assurance were the best performing stocks, gaining 10% and 9.81% respectively, closing at N5.61 and N3.47 per share respectively on the back of sentiment and market forces respectively. On the flip side, NSLTech and Daarcomm lost 9.84% and 9.68% respectively, closing at N0.55 and N0.56per share, purely on profit taking and selloffs.
Market Outlook
We expect mixed sentiments to continue as players digest Q3 GDP and await outcome of MPC meeting in the midst of profit taking, bargain hunting, 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.
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1. Impact of 2025 National Budget & Changing Government Policies On Investment Windows, by Mr Peter Sunday Adebola, Managing Director/CEO Edgefield Capital Management Ltd
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5. How To Navigate The Alternative Markets To Grow Your Portfolio in 2025, by Alhaji Garba Kurfi, MD/CEO APT Securities & Funds Ltd
6. Building All-Weather Portfolio To Stay Ahead Of NGX IN 2025 & Beyond, by Mr Abiola Rasaq, Former Head, Investor Relations & Portfolio Investments United Bank For Africa Plc
7. Profitably Chart Patterns & Timing To Trade “Year Ending In 5” Effect On NGX In 2025, by Mr Abdul-Rasheed Oshoma Momoh, ED Operations at, TRW Stockbrokers Ltd
8. The Place Of Corporate Earnings In Trading & Investing For Retirement, by Mr Kebira Jimoh Aruna, MD/CEO GlobalView Capital Ltd
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Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
08028164085
