Mixed Sentiments On TB Rate Hike, Portfolio Rebalancing, Economic Data

Market Update for November 8

The bull run on the Nigerian Exchange continued at the midweek as investors increased buying interest in the face of portfolio reshuffling ahead of macroeconomic reports, policy meeting and year end seasonality, which impacted positively on the benchmark NGX All-Share index that closed higher on a very high traded volume and positive market breadth.
The buying pressure at the end of the day’s trading extended the market’s positive momentum and sentient for the fourth successive day on improved transaction volume, in the midst of impressive quarterly earnings and higher yields in the fixed income market. There was a further rates hike at the end of midweek’s Treasury bill primary auction to 7%, 11% and 16.75% respectively for 91days, 182days and 364 days tenors. This will be a mixed bag for the equity market in a short time as NGX index is already trading at overbought region, but as real returns in the money and bond markets remain negative on rising inflation which was at 27% as at September, now that all eyes are on consumer price index for October next week. Equity market still remain strong window to hedge against the nation hyperinflation.
Meanwhile, retail and institutional investors are expected to digest this latest TB rate hike and positive corporate earnings to reposition their portfolios ahead of year end, as outlook for money and bond market yields remain mixed in the face of slow economic growth and heightened insecurity across the nation, for which many countries have issued travel advisory on where to go, or avoid in Nigeria, which is not good for the economy, because no foreign investors will want to come in now except for the high risk takers.
The Money flow index and candlestick formation revealed a bullish momentum, as the index again hit a new all-time high of 70,773.38 points to extend the markup phase. So, continuation or reversal needs to be confirmed as the top chart pattern of the index support reversal which traders needs to watch out, even as NGX index action is trading above the T-Line to signal strong momentum on a very high volatility.
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Oil price oscillation continued, as it trades at $80.18 per barrel in the midst of doubt in oil demand and weak trade data from China and others in the face ongoing middle east conflict. Despite the rate pause by central banks and cooling inflation. As geopolitical tensions across the globe continued to rise, at a time the Russia-Ukraine war entered its second year, and remains a major concern. The supply tightened due to the Russia-Ukraine will drive up and down movement in oil price, which also drive market volatility across the globe.
Midweek trading opened in the upside and its sustained throughout the session, despite oscillating on profit taking and increased buying interest in blue chip stocks that pushed the Index to an intraday high of 70,773.38bps from its lows of 70,613.60ps, before closing above its opening figure at 70,773.31bps.
Market technicals were positive and strong with a higher volume traded, when compared to the previous session, in the midst of breadth favoring the bulls on a buying sentiments as revealed by Investdata’s Sentiments Report showing 100% buy position and 0% sell volume. The total transaction volume index stood at 1.53 points, just as the energy behind the day’s performance was strong, with Money Flow Index reading 78.52pts, from the previous day’s 71.80pts, indicating that funds entered the market.
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Index and Market Caps
At the close of trading, the NGX All-Share Index gained 159.71bps, closing at 70,773.31bps, from the 70,613.60bps opening level, representing a 0.23% growth. Market capitalization rose by N87.80bn, closing at N38.88tr, from the previous day’s N38.80tr, which also represented a 0.23% value gain.

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The upturn was driven by position taking in BUA Cement, UBA, Wapco, FBNH, GTCO, Accesscorp and Japaul Gold, among others, impacting positively on Year-To-Date gain which inched up to 38.09%, while Market Capitalization YTD gain stood at N10.53tr, representing a 39.60% rise above its opening level for the year.

Mixed Sector Indices
Sectoral performance indexes were mixed, as the NGX Consumer goods index closed 0.06% lower, while NGX Insurance led the advancers after gaining 2.67%, followed by Industrial goods and Banking with 0.87% and 0.26% respectively. Just NGX Energy finished flat.
Market breadth turned positive as gainers outnumbered losers in the ratio of 28:24, while activities in volume and value terms were up, after players exchanged 558.34m shares worth N9.79bn, driven by trades in FBNH, UBA, Universal Insurance, Fidelity Bank and Unity Bank.
Japaul Gold and Prestige Assurance were the best performing stocks, gaining 9.87% and 9.76% respectively, closing at N1.67and N0.45per share respectively, on market sentiment and primary market activities. On the flip side, Caverton and Meyer lost 9.87% and 9.85%, closing at N1.37 and N2.47per share, purely on the back of profit taking.

Market Outlook
We expect mixed sentiments on reaction to TB rate hike at 16.75% and portfolio rebalancing on the strength of the better-than-expected corporate numbers released and expected inflation reports in the face of sector rotation.
Meanwhile, all eyes are on the fiscal and monetary authorities to give direction of the government reforms and policies so far.

Take Action

Invest 2024 Traders & Investors Summit 
Theme: Navigating Nigeria Economic Reality With Diversified Portfolio & Investing
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2. Current Reality Of Rising Inflation & Mixed Interest Rate Outlook: Where Is Fixed Income
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3. Where To Shop On NASD/OTC Market For Profitable Trading in 2024 & Beyond 
4. Real Estate Investment Opportunities in the Hyper-Inflationary Environment Of Today 
5. Understanding Commodity Markets For Profitable Portfolio Diversification in 2024 
6. NGX ETFs Products As Investment Alternatives In 2024 
7. Manging Investment & Trading Risks: Using Technical Analysis/Indicators 
8. Trading With Numbers & Dates: 10 Golden Stocks For 2024

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Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605